So we are getting closer, but still not there yet with all the facts needed: You purchase $1,000 in crypto A and the price increased to $2,000. You indicate that you then purchased $10,000 in crypto B (accomplished through a margin loan). You then state that the price dropped and the account was liquidated. What was the price of crypto A when it was sold? What was the price of crypto B when it was sold? It appears that you may have some margin interest expense and this expense may be deductible as long as you have investment income.  This will be computed on form 4952.  This will only benefit you if you itemize your deductions, but will be "lost" " if you take the standard deduction. In conclusion, you have 3 separate transactions that will need to be addressed. ... View more

Perfect.  Hopefully my lifeline request will be able to provide some direction on the input of this carryover section 179. ... View more

@micpot then you need to reflect the section 179 in your 2021 form 1065. Unfortunately this is a windows only program and I am on a mac, so I don't know the logistics of getting this into the software.  However, I would have guessed this would have carried over; but maybe not. Finally, was there sufficient income at the entity level to take all of the carried over section 179?   I will use a lifeline to see if this individual is able to provide some software help in this area. @tagteam    ... View more

I agree with @Critter-3.  You need to code this as recourse debt allocated specifically to you (100%).   ... View more

@MarilynG1 your link doesn't work; at least for me. @micpot I have several questions / comments: The section 179 limitation is limited to business income at both the partnership level and partner level. When you indicate the section 179 was not allowed because of a loss, was that at the partnership level? If bullet 2 is "yes", then no section 179 should have been allocated out to the partners on their respective K-1.  The deduction is suspended (carried over). Was there income at the partnership level in 2020? If "no", then your section 179 deduction is still suspended (carried over) If "yes", then you should have included this on the 2020 form 1065 and K-1's Finally, is there income in 2021 at the partnership level? We need to understand the answers to the above before we can provide more clarity. ... View more

A few additional comments: Keep in mind, that the 1065 and K-1 reporting are tied to the entity activity.  Partnerships and LLC's taxed as a partnership can certainly have ST and LT gains and losses.  Those would be reported on lines 8 and 9a.   The members basis at this point has no bearing on what you are reporting at the 1065 level.  Once again, this is entity level reporting. Once each LLC member receives their K-1, this information will be reported on their respective 1040. Finally, each member will need to adjust their tax basis for the final K-1 activity.  At that point, each member will then determine whether they have a capital gain or loss on the liquidation. ... View more

While it is the goal to provide a response to a question, some questions are just not conducive to being able to be addressed in a forum such as this. Your response brings up many more questions, and at this point, I agree that you will be best suited to have a one on one with a tax professional. Having said that, here are some additional questions that will need to be addressed and some comments: Based on the facts, your multi-member LLC "contributed" property into another LLC.  There are a number of issues that need to be addressed with this step Is the "drop down" LLC also a multi-member LLC? You indicate that "I" moved property, however, your response indicates that it was a multi-member LLC that actually moved (contributed) the property.  Still not comfortable with the facts. Based on bullet 2, did the "new" or "drop down" LLC sell the property? Are there related parties involved? Due to the property being contributed, there are rules that will govern the basis of the contributed property, built-in gain issues, and most likely special allocation of any gain upon sale to the contributing LLC. Unfortunately, as you can see, regardless of the size of a transaction or business entity, the tax issues can get complicated very quickly.  You would be wise to spend the $$ with a tax professional, as any improper reporting could end up costing you way more in tax and penalties; not including your time in dealing with the IRS on the issue. ... View more

While I agree with @Critter-3 you don't need to "report" the transaction, there is a question on the 1040 that needs to be answered by every taxpayer regarding virtual currency transactions.  See the following discussion from the 1040 instructions on page 17: A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control. If your only transactions involving virtual currency during 2021 were purchases of virtual currency for real currency, including the use of real currency electronic platforms such as PayPal and Venmo, you are not required to check the “Yes” box next to the virtual currency question. So based on your limited facts, you should answer this question "no". ... View more

We still don't have sufficient details to address your question: This is still confusing since you are asking in TT online, but refer to TTbiz.  There is no TTbiz online.  How was the property originally held? Did you just "drop down" the property from owning it personally into a single member LLC? At any point in time do you have a multi-member LLC? ... View more

@Mike9241 would your response be the same if they resided in a community property state? ... View more