K-1 - Complete disposition vs. Disposition was not via a sale

[Seeking___]

I am looking for clarity on how to enter information about a Final K-1.  I am a passive member of an LLC that sold the buildings to a third party in 2020.  Since the buildings were sold by the LLC, the LLC has been dissolved.  I received my final distribution (Box 19).  Amounts for 1250 gain (Box 9c) and 1231 gain (Box 10) are listed in the K-1.  I understand how the enter the Box 9c, 10, and 19 information into Turbotax.  However, I am confused on how to categorize the "sale".  I have seen different posts in the discussion board including one with a response from @Rick19744 indicating to mark "Complete disposition" and use my distribution as the sales price,

https://ttlc.intuit.com/community/business-taxes/discussion/how-enter-final-k-1-for-final-disposal-l...

while another with a response by @DavidS127 indicates "Disposition was not via a sale" and to not enter a sales price,

https://ttlc.intuit.com/community/taxes/discussion/schedule-k-1-section-1250-gain-characterization/0...

Conceptually, entering no sales price seems accurate since I did not sell anything, but also seems like a red flag to the IRS.  I have been tracking my basis over the years, and while it is close to the final distribution, it is not the same.  So if I enter this into Turbotax, I end up with a small amount of long-term capital gain on that difference.  I want to make sure this is accurate and that I am not being partially double-taxed.

[Rick19744]

Regardless of which "disposition selection" you choose, you will get to the same result.

Keep in mind that you will need to update your tax basis by the final K-1 items EXCEPT for the distribution amount reflected in box 19.  

• Determine your tax basis as noted above
• Enter the K-1 items into TT as you have noted
• TT will at some point ask for "selling price" or some other terminology and this will be your final liquidating distribution.
• TT will also ask about your tax basis and then enter this as well.
• I would expect the final K-1 to have a note regarding any Section 751 related to the disposition.  This would be your share of any ordinary income recapture on depreciation related to tangible assets.  If you do have this information, your overall gain will not change, just the character and how to show this on the return.
• Having a small gain is certainly not out of the question.

[nexchap]

One additional distinction:  "Complete Disposition" will release ALL suspended losses, while "Disposition not via a sale" may leave some in suspension.  This may not apply to your case.

[Seeking___]

Thanks, @Rick19744.  I appreciate the quick reply and all of the clarifying information.  I have not included the final distribution in my basis calculations.  I went back through my basis calculation spreadsheet and found that the gain matches the amount of business interest limitation that was in a prior-year K-1.  My understanding is that the limitation reduces my basis since it is a partnership and not an S-Corp.  I hope I have this correct.  There is no mention of Section 751 gains in the K-1.  Nor is there a code AB listed under box 20  where I would expect it to be.

@nexchap- I do have suspended losses from last year, so it is important that I free those up.  Thanks for the pointing out the distinction.

[Rick19744]

You are correct in that any loss limitations will reduce your tax basis even if suspended.  However, these suspended losses will be freed up upon your complete disposition; assuming you have basis.