Schedule K-1 Section 1250 Gain characterization

[InBiz]

I'm part of a multi-member LLC. The single commercial property it contains was sold in 2019 and the LLC disposed of. I've marked the Partnership as ended in 2019 and 'Disposition was not via a sale'. The property was sold, but that constituted the only sale. Is this correct? I had 'Unrecaptured Section 1250 Gain' due to the depreciation taken over the years on the property, but did this come from 'Disposition of an interest in a partnership'. I'm assuming not? It came from the sale of the partnership's asset.

[DavidS127]

The Unrecaptured Section 1250 Gain from the partnership's sale of the asset should be reported in box 9c of the Schedule K-1 you received from the partnership.

The termination of the partnership is a disposition.  After you enter the K-1 from the partnership, TurboTax will ask you about the disposition.   If everything you received from the partnership is reported on the Schedule K-1 and entered into TurboTax, during that disposition you will report no amount for the sales price (because the partnership terminated, and everything you received is reported on the K-1), and your adjusted basis in the partnership after all the current year activity (which may be "zero", i.e., you won't have a gain or loss on the disposition of your share of the partnership).

If you had prior year disallowed passive losses for this partnership, those should show up as a deduction on your tax return in the year the partnership disposed of the asset.