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Level 4

Entering Final K-1 for Crowdfunding Real Estate Investment

Hi, so I received a Final K-1 (the check-box is marked FINAL) for a three year old Crowdfunded Real Estate LLC investment.

 

Over the years, the Partner's Capital Account has been adjusted, "L" section is marked "Tax Basis" so the basis has been adjusted up and down in each year's K1.

 

For TT interview questions I did the following:

1) Mark that the partnership ended (since the Final K1 box is checked)

2) Mark it was Complete Disposition (technically they sold the properties on behalf and wound down the LLC)

3) Mark Sold Partnership Interest (this is also counter-intuitive but since it exited then it looks that the partnership interest was "sold"/liquidated so I could exit out of the LLC).

4) Asks about purchase date and sale date which I pull from the investor portal and own notes

5) Now the next screen asks about: Sale Price, Sale Expenses, Partnership Basis, Ordinary Gain, 1250 Gain.

6) For Sale Price, I'm using the liquidation price, in this case it's the final withdraw amount that I see in the Section L Withdraw & Distributions -- this is the actual real money I received back from the LLC so this makes sense to me.

7) For Basis, since section L is marked "Tax Basis" and it's been adjusted up and down each year, I'm taking the beginning capital account as the adjusted partner basis for the current year (if I take the final one it's zero since the withdraw cashes everything out). This matches my initial investment I did three year ago so this also makes sense to me.

😎For Ordinary Gain this was a little confusing to me, but reading in the forums people were saying it's the current year adjustments, so in this case in section L I use the Current year increase (decrease) number. Additionally, attached to the K-1 is a an entire "Analysis of Partner's K-1, Current Year Increase (Decrease) Worksheet" and looking at those notes it also calculates the current year gain (decrease) which matches to what I see in section L so using this as Ordinary Gain part.

9) For 1250 Gain, I'm looking at Part III 9c of the k-1 and in my case it's blank.

10) All said I have the following: Sale Price of 5163, Basis of 5000, Ordinary Gain of 162, 1250 Gain of 0.

11) The rest of the interview is standard entries from the k-1

 

Questions:

1) This seems correct but did I miss anything? Specifically on the Sale Price, Partnership Basis, Ordinary Gain, 1250 Gain boxes.

2) Withdraws are actually 5163 so the ending partner's capital account is "-1" --- is this likely some rounding error? Usually for Final k-1s I see them just net it to zero. Seems like I "owe" the partnership a dollar now :). Something to worry about?

 

Thanks so much!!!

 

 

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Level 10

Entering Final K-1 for Crowdfunding Real Estate Investment

-1 has to be rounding