I have a K-1 for the last half of the year. It was converted June of 2017, so I need to report the 1st 6 months on Schedule E, is that correct? How do I show the asset conversion from a partnership to an LLC?
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This is a two-step process, and Cathi's answer is not on inclusive of the more finite details you need to know.
Step 1 - Dispose of the property on your personal tax return.
Step 2 - Show the acquisition of the property by the partnership.
For now, my response will "ONLY" deal with the correct and proper disposition of the property off of your personal tax return, in a way that will allow for it's non-monetary transfer into the 1065 partnership return. I am assume that you did ***NOT*** own 100% of the property when reporting it on your personal return, meaning that all partners will need to do this, assuming all partners are using TurboTax.
Start working through your rental property *AS IF* nothing is changing. About 2-3 screens in select the checkbox for "I sold or otherwise disposed of this property in 2017" and keep working things through "as if" nothing has changed.
When you get to it, you will report all rental income received up to the date of disposition/transfer.
You will report all rental expenses incurred up to the date of disposition/granfer
For the assets, that section is now titled Sale of Assets/Disposition. Elect to update/edit that section. You must do the below for each and every asset listed individually.
Work through the asset and select YES to indicate that you did stop using the asset in 2017.
When you get to the "Special Handling Required?" screen, you must click YES. If you click no, then you are telling the program that you sold the property for money. So you MUST click YES on that screen. Then continue working the asset though. You will not be asked for any sales information. You MUST do this for each individual asset listed, one at a time. Make sure your disposition date is the same for all assets. This date must also match excactly, the disposition date of the owner property owners also.
At this point, we're ready to start entering the property in the TurboTax Business program. I assume you will be filing a 1065 Partnership return since this is a multi-member LLC. Let me know when you're ready to continue.
Do note that you can NOT file *any* tax return at this point, because your personal tax return is not done until you've entered the information from the K-1 that the partnership will issue to each owner.
When you go through the interview in TurboTax to dispose of your rental property, you will have a chance to enter the correct prior deduction (through 12/31/16) and it will show you how much it calculated the 2017 depreciation (through 06/22/17). It sounds you are saying you are not getting the correct depreciation for the period 01/01/17 - 06/22/17. I cannot see your return, so I am not able to see what could be wrong. One possibility could be if you changed the purchase price when you entered the disposal. You should enter selling expenses and closing costs in the box "Asset Sales Expense" under "Asset Sales Price". If you add selling expenses and closing costs to the cost box, it will mess up the depreciation.
You will probably have recaptured depreciation as part of the gain that TurboTax gives you at the end of the interview. This is because you took a deduction for depreciation when the property actually appreciated.
To report the sale of rental property:
When in your tax return, under Wages & Income tab at the top, scroll down to Rental Properties and click on Update. There are 2 places you have to report the sale, in the Property Profile and the Asset section
I am in the same situations and wanted to know the 2nd step. We had bought the property in 2015 have take depreciation in last 4 yrs now transferred the property to LLC but how to show in TT that depreciation has already been taken for 4 years .
Thank you
Pranav
The last I checked, you can do it in TurboTax. It will keep giving you errors.
Who are "we"?
And how have the "we" been reporting the rental in the past ? On personal returns on a Sch E ?
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