Cash basis liquidating distributions

07-Aug-2016 18:59 by 2 Comments

Cash basis liquidating distributions - darin zanyar dating

If you have suspended losses as a result of the passive activity rules, these losses can be freed up in this final liquidation year.  You need to indicate that this is the final K-1 in TT and these suspended losses will be allowed on your tax return.

Rick - thanks for answer but I could use a bit of clarification. My original contribution to the LLC was 4,397 with no subsequent contributions or distributions (until liquidation this year).

However, assuming the above is correct, the question is how all this gets entered into Turbo Tax.

What I did: In K-1 section, I checked "this partnership ended in 2015" and, on next screen, "disposition was not via sale" (since it was liquidated, not sold, and other alternatives led to me to pages asking for "sale price of partnership").

The property was sold shortly thereafter with my share of the net proceeds being 6,239 which I think produced a loss on sale of ,904 (6,239 proceeds less 1,143 basis).

If this misinterprets your response, please let me know.

I have reported the sale in the "sale of rental property" section of Turbo Tax Premier adjusting the basis accordingly and am seeing the correct overall loss on sale.

However, Form 8562 still shows the passive loss balance as unused even though LLC has been terminated.

The rental property was sold a week thereafter (was not rented between time of distribution and sale).

If the LLC had sold the property and then liquidated, presumably everything would be shown on K-1 and passive loss would have been recognized on termination of LLC. The property was sold at a gain based on LLC's basis in property but I believe basis is adjusted for the unused passive losses.

Do I just need to manually override Form 8562 or did I enter this all in Turbo Tax incorrectly? As a member in an LLC you should be maintaining your basis in your LLC investment.

  This begins with your capital contribution and is adjusted annually by your applicable K-1 line items.

In the 2015 liquidation I received ,254 in cash as well as my pro-rata share of the property which was shown on K-1 at 7,655.