selling interest in a property LLC

[ehbreuner]

I am selling my interest in an LLC which holds a vacation property and has 15 members. What forms will need to be completed, and what TurboTax version will be needed to file in April 2021?  I have used TurboTax Deluxe and Premier, but don't know if they can cover this.

[M-MTax · Accepted solution]

Might be too much this year and you should see a tax pro if uncertain.....but you should be able to use TT Premier and the forms include 4797, 8949, and SCH D plus you should have a K1

[ehbreuner]

Thank you very much for your guidance.  and yes, I will have my final K-1.

[Anonymous]

when you sell your interest gain or loss is measured by the difference between your selling price and your adjusted basis. The gain would be capital except for any portion attributable to section 751 - see further on. It would be long term or short term depending on how long you've held the interest. there is no depreciation recapture. however, the partnership is required to notify you if any part of the gain is under IRC section 751 which requires you to recognize ordinary income for unrealized receivables and inventory (a real estate venture probably does have these items).  

[ehbreuner]

I used TT Premier, completed entries from my final K-1, and TT put the gains on Schedule 1, line 4 as Other Gains (w/ Form 4797), and not of Schedule D under Long-Term Capital Gains.  this resulting in a direct addition to my total income, rather than application of Capital Gains rates.

the line of questions unde my K-1 asked if I sold my shares in teh LLC in 2020, the Proceeds adn Cost Basis.

My final returns do not include the gains on Sched D, and did not produce a form 8949.

Where did I go wrong?