K-1 and Dissolved LLC

[vtpeco]

Can someone please help with K-1 information and an LLC being dissolved.  This was a rental house that was sold and the LLC only had 2 members. TurboTax is asking for:

- Sale Price. What number represents this on the K-1? Or is this the home closing price (net or gross?)?

- Selling Expense. Are these the closing costs of selling the house?

- Partnership Basis. Is this the 'Beginning Capital Account' on the K-1?

- Ordinary Gain. Is this Box 1 of the K-1?

- 1250 Gain: Is this Box 9c?

What about the figure I have in Box 10?

I'm hoping someone can help and address these specifically ... I'm on the phone now with the 'Live Tax Expert' and they have no idea :(

Thanks.

[Mike9241]

are you working on the partnership return or the K-1 it issued to you for the LLC. 

if you are trying to enter the k-1 for your 1040 info you are looking at the wrong section in Turbotax

k-1 entry is started in the business items interview section - all info needed is on the k-1 (no sales price no cost of sale to enter) 

it looks like your trying to enter the k-1 through the Rental property section - it doesn't go there

on the other hand, if you are working on the partnership return you need TurboTax Business to do the return.

[vtpeco]

Thanks Mike9421. I am working on the Personal K-1. When I tell TurboTax I have a K-1 to  enter and that the business has been completely dissolved, it prompts me for the dates it was started and the dates it ended. It then asks me for all that other information. Even if I go to the K-1 directly and enter all the K-1 box information, TurboTax still wants that other info (Sale Price, Selling Expense....). It greatly affects my taxes if I enter / or not enter data for those questions.

[Rick19744]

You have an investment in an LLC and should have been maintaining a tax basis schedule of your investment.

Since you are telling TT that you no longer have this investment, TT is wanting to know you tax basis information along with the date of liquidation.

Based on the limited information:

• Your selling price is the liquidating distribution you received from the LLC
• Your cost is your tax basis in the LLC
• In summary, TT is NOT asking about the sale of the rental property as that was handled at the LLC level and is reported on the K-1.  TT is asking about your investment in the LLC to determine an overall gain or loss on this investment.

[vtpeco]

Thanks. I think I've got this figured out but if someone could confirm that would be great. I still can't get anyone on the phone that knows this. 

For the Sale Price, I'm using the 'Distributions' amount on my K-1 (Box 19). This figure represents liquidation of the LLC, including selling the rental property.

For the Selling Expense, I'm using the allowable deductible closing costs from the sale of the rental property as well as any other expenses involved with dissolving the LLC.

Partnership basis  is my initial investment into the LLC, which was the rental property.

Ordinary Gain figure was taken from the 'Net section 1231 gain(loss)'  line in my K-1. (Box 10)

1250 Gain field was populated with Box 9c, 'Unrecaptured section 1250 gain' from the K-1.

This seems to make sense to me but I would love for someone to verify it. Sure would be nice if TurboTax input made this clearer.

Thanks, Val.

[Rick19744]

Responses to your follow-up questions:

1. Sales Price - appears to be fine
2. Selling Expenses - you shouldn't have any of these.  All these costs should have been captured at the LLC level in determining the gain on the sale of the property.
3. LLC Basis - this begins with your initial capital contribution to the LLC.  This amount is then adjusted annually by the applicable lines on the K-1 issued to you.  It is then adjusted for the applicable final K-1 lines EXCEPT for distributions in this case.  For your final K-1, the distributions will be used as your sales price as noted above.  In all other years, distributions would decrease your tax basis.
4. All other K-1 line items should be entered as they are normally.