capital gains on a business property

[cassieerne]

I have been a part of 6 person LLC who owned a rental property the last 7 years so have always claimed that loss on our 1065 forms and then distributed loss amongst us via k1.  The home is in my personal name.  We sold it this year and are planning on dissolving the business after we file taxes this year.  Since the home was in my personal name how do I go about entering that info for my personal capital gains tax????  I know the business isn't technically the one to pay for this through the 1065 since the home was always in my name from day one to date of sale.  

Every time I click on yes to selling a property (2nd home) it directs me to put that info under the business section instead.  I don't think this is right since technically a)  this isn't a schedule C business, b) it was filed under a 1065 rent schedule in the past and never as a business on my personal, and c)  the home is personally in my name so other then the fact we claimed the loss under the LLC, it has always been in my name.  

Any members have this situation in the past that could help me out?

[Anonymous]

I strongly recommend you seek professional help.   The correct answer may well depend on real estate laws in your state or the state the property is in, if different.   the issue I can't answer is "was it proper to allocate the rental activity and report it on a 1065 for the LLC when the LLC did not own the property".       It may be that the past returns are wrong. and that you are the one to report the entire sale. 

hopefully others will comment.         

[Carl]

Nothing concerning this rental property should be reported on SCH C of "any" tax return for "ANY" tax year.

Your personal 1040 tax return should have nothing on page 1 of the SCH E concerning this property. The partnership reports the sale through the SCH E on the 1065. If this is the last thing the partnership needs to dispose of prior to dissolving the partnership, then that 1065 will be marked as a "final" 1065 and all K-1's issued to all partners will be marked as a "final" k-1.

When   you enter the K-1 on your personal tax return it will only use page 2 of the SCH E on your personal tax return, and that's it (for this specific rental property.)

YOu will not report the sale of this rental property on "ANY" personal 1040 tax return. It's reported on the 1065 return. The K-1 issued will show your share of the gain (or loss) on the sale, and if you just enter the K-1 exactly as printed, that's all you do on the personal tax return.

As for the ownership issue, that's a totally separate legal issue outside of taxes, that will most likely bite you big time if your state taxes personal income. But while the state tax filing will make this apparent, it won't affect your tax filing as much as it will affect the legal right of the partnership (instead of you) to sell it.

[cassieerne]

If the home was not owned legally by the business why would that go on the 1065’s if the LLC didn’t sell it?  Only two members of 6 of members were on the deed/title from the time it was purchased to the time it was sold.  

[AmeliesUncle]

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@cassieerne wrote:

If the home was not owned legally by the business why would that go on the 1065’s if the LLC didn’t sell it?  Only two members of 6 of members were on the deed/title from the time it was purchased to the time it was sold.  

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If the home was not legally owned by the business/LLC, why have you EVER filed a 1065 to report the business/rental?

As was mentioned before, go to a professional.

[Anonymous]

seek tax pro help.  state law may affect the results.  we are not lawyers and can not give legal opinions.   to top it off you said you owned it, now you say there were others on the title.    giving incomplete and inaccurate info results in inaccurate answers.