LLC sold land and don't know which form to use

[tamaira_murray]

We have a multi person LLC and based on Turbo Tax recommendation purchased Turbo Tax Business. The LLC sold one parcel of land and bought another it in 2021. There is no place to report this in the Business software. I researched it and it said to use Premier for buying and selling land. Is Premier usable for LLC's? Is there some way I can report this using Business? I already purchased Business and don't want to purchase Premier just to find out I can't use it either. I tried calling the "help" line, but couldn't get a person and the recording kept hanging up on me. I'm at a loss. 

[DavidD66]

A multi-member LLC is treated as a partnership for tax purposes.  You need to file a Form 1065.   You will have to create an asset for the land you sold, and then dispose of it as a sale.

[tamaira_murray]

Thank you. Can I do that using Business? Will Turbo Tax automatically complete an 1065 using the info I provided?

[HelenC12]

Yes, you must use TurboTax Business. You can't use TurboTax Premier since that is for individual income tax returns. When you sign on to TurboTax Business, you will have a choice of Business tax returns. Select Form 1065, U.S. Return of Partnership Income.

• Due Dates for Form 1065 are: March 15, 2022 (September 15, 2022 with extension) for 2021 tax returns.

TurboTax will generate Form 1065. It will also generate K-1's for each partner. The partner's report the K-1 information on their personal income tax returns. 

Related information:

• How do I issue a K-1?
• Where do I enter a K-1 that I received?

 

[Carl]

We have a multi person LLC and based on Turbo Tax recommendation purchased Turbo Tax Business. The LLC sold one parcel of land and bought another it in 2021

If that land was acquired by the LLC prior to 2021, I would expect it to be listed either as inventory or as a business asset. If listed as an asset, you'll report it's sale in the Business Assets section. If listed as inventory, then you report the gross income received from the sale sale in the Business Income section and indicate the inventory as sold in the Cost of Goods Sold (COGS) section of the program.

If the LLC is in the business of buying and selling real estate, then I would expect all real estate acquisitions to be reported as inventory. Whereas if the LLC is in the business of buying and renting out real estate for any period of time before selling it, I would expect it to be in the business assets section with rental income/expenses reported on form 8825.

[tagteam]

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@tamaira_murray wrote:

Is there some way I can report this using Business?

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As has been mentioned, you have the correct product to prepare Form 1065 for your LLC. However, your return is late (it was due March 15th) so be prepared to justify the late filing with some sort of reasonable cause (if, in fact, there is any).

See https://www.irs.gov/instructions/i1065#en_US_2021_publink11392vd0e1221

[tagteam]

If the land that was sold is investment property in the hands of the LLC, report the sale as a capital transaction.

[Mike9241]

the question we can't answer is whether the land is inventory and thus the gain would be ordinary or a capital asset in which the gain would be a capital gain.

see this link for more guidance

https://www.thetaxadviser.com/issues/2014/dec/tax-clinic-07.html