I am converting an LLC rental property to my primary residence. It is off the market for rental purposes. Do I need to dispose of all assets? ? Using Business addition.

[jdave57]

I am converting an LLC rental property to my primary residence. This is the only asset the LLC has. Do I need to dispose of all assets and just dissolve the LLC? Do I indicate that this is the LLC's final return? I am using Business addition so that I can generate K-1's for our personal return. My wife and I are the only members. The short term rental has been taken off the market as of 12-31-2018 and no longer available to produce any potential income. We are making an addition to better fit our needs as our "going-to-be" primary residence. 

[Anita01 · Accepted solution]

Yes, you need to do what you've suggested.  Mark the k-1 as final.  Enter each asset and say you converted it to personal use.  That will stop the depreciation without making you come up with fake sale numbers.  Keep this final k-1 that shows accumulated depreciation, because the amount of depreciation taken will become taxable if and when you sell the property, even if you meet all the conditions to exclude gain.  Depreciation is taxed, then any allowable gain exclusion is applied to the remainder of the gain, over and above depreciation.

[jdave57]

How do I mark as "converted it to personal use". I have marked as "disposed of by other means". Not Sold. The assets were distributed to the partners.

[Anita01]

Sorry, forgot for a minute you were multi-member LLC.  What you chose is fine.

[jdave57]

I have a huge loss on my K-1 (10) of almost $200k

[jdave57]

I found this from an earlier post regarding 2016 …. In the rental property section under your Property Profile, indicate that in 2016 you converted the home from a rental to personal use.  Cant find it anywhere in 2018 business

[Anita01]

You can't find it because that's not an option for you.  In a multi-member situation, you can't just say you converted something to your own personal use, the assets have to be distributed among the members, just as you chose.  That' why I apologized for forgetting you were a multi member.  Had I not forgotten, I would never have mention the convert to personal use option.

[jdave57]

The loss on my personal K-1 does not seem right. How can I correctly reflect my loss. The FMV is almost the same as it was when we formed the LLC in 2016

[jdave57]

How do I distribute the assets to the member (My wife & I) and will that produce a large capital gains for us on a K-1?