I am part of an S-Corp that purchased an investment property that was deeded to 4 members individually, with a mortgage deed for same 4 members. It was assumed this was an asset of the company but is now being used to represent partnership interest.
Two of the 4 members are being bought out of the company, using their "capital contributions" as the cost of their shares with equal roughly 15k each. The remaining partners want to process this a real estate sale to remove the names from the deed and mortgage deed at a cost of $15k each. The property was purchased at 205k, so 25% = roughly 51K.
My question is how to report this on taxes. We will be "selling" at 30k total but our portion of purchase price was roughly 102k. We are not actually taking a capital loss as the 15k each is exactly what we had invested into the company at this point, but we are also not making any capital gains.
I am trying to understand how this sale of property could cause tax issues - or if it does cause a loss since we are losing interest in a property valued at 205k?
