Where do I show property distribution to a LLC member of a land asset?

[bill_s2]

The step-by-step instructions have a form for entering cash and property distributions to s-corp shareholders.  The property distribution entry does not differentiate between land and depreciable assets.  How do I input sufficient information to determine whether a gain or loss is reported and the taxes are calculated properly ? 

Also, how is this asset removed from the list of assets so it is not reported in the future.  

[Anonymous_]

You can indicate in the program that the asset was given away and the date (do not, obviously, indicate that it was donated to charity.

If the property is merely distributed to shareholders in kind, there should be no gain or loss reported at the entity level and the shareholders will take the corporation's adjusted basis in the property. The distribution is primarily a book (balance sheet) entry.

[bill_s2]

I report the distribution at book value, not at fair market value? 

Or do I report the distribution at fair market value, but dispose of it on the books at book value?  

[Anonymous_]

Yes, the member's capital account is decreased by the  FMV of the property distributed.

[bill_s2]

The FMV of the property is greater than the book value (property includes land and sec 179 depreciable property).  Does the member's K-1 include income from the difference between book value and FMV?

[Anonymous_ · Accepted solution]

Members need to keep track of their bases.

The member's K-1 will show the distribution but not as income.