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Returning Member
posted Apr 12, 2021 2:30:09 PM

What forms do I need to fill out in order to distribute property from a LLC?

Hello -

 

My partner and I would like to distribute a rental property from an LLC to our personal names.  The property is fully paid off, and there are no profits. I believe this would be characterized as a "return of capital" so no taxes would be owed.

 

From a logistics perspective, what forms need to be filled out in order to record the distribution of property to our personal names?

 

Thanks!

0 2 1040
2 Replies
Expert Alumni
Apr 12, 2021 4:12:57 PM

You need to report the property distribution in box 19 on schedule K-1, with a code C, which is for "other property."

Level 15
Apr 12, 2021 4:18:38 PM

Depends on how the property was put in the LLC to begin with. If the two of you originally owned the property and put it in the LLC as a capital contribution, then removal of the property from the LLC back to the original contributors would be a return of capital. But you still have to show the transfer/removal of the asset from the LLC/Partnership. (I'm not up to stuff on exactly how to do that part.)