Question

TT, filing of K-1 after the syndicate LLC sold

Forum|Forum|4 years ago
April 4, 2022
1 reply
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Hello,

I was a passive investor in syndicate LLC for three years.

We sold this LLC by the end of last year.

I received K-1 that include both "net section 1231 gain and unrecaptured section 1250gain.

My problems start when I try to file the K-1, I am asked to "enter sale information" with sale price and partnership basis.

However, when I do that and than fill the K-1, I find that the tax are calculated twice. (addition of the gain reported in K-1 and the sale information gain).

Should I ignore the sale information if I have already the gain captured in the K-1 ?

Many thanks,

PatriciaV

Employee

Yes, because the activity reported on Schedule K-1 was NOT the sale of your investment in that company. Unless you sold your interest in the LLC to a third party, you would report that the LLC ended in 2021. Then indicate that you disposed of this investment "not via a sale." This releases any passive losses without requiring you to enter sale & basis information. It be clear, you would not enter any sale information in this instance.

However, if you did sell your interest to a third party, report that you completely disposed of the investment and enter the third-party sale and your adjusted basis information to calculate a gain/loss.

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