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Question about long-term capital gains for income tax reporting.
Posted on 12/4/17 at 6:58 am
Posted on 12/4/17 at 6:58 am
A few parcels of land which had undivided interests were contributed to a Family Group LLC. Each owner inheirited their interest at different dates. One parcel was sold in 2017. A K-1 form is expected be issued to LLC members in March.
How is the basis of the property that was contributed and sold determined?
How is the basis of the property that was contributed and sold determined?
2
Posted on 12/4/17 at 7:57 am to CharleyLake
I believe basis would be carried over from the grantor’s original basis.
Correct me if I’m wrong.
Correct me if I’m wrong.
Posted on 12/4/17 at 9:11 am to CharleyLake
Basis is going to be the FMV of the land when it was inherited. There could also be built in gains to whichever member of the LLC contributed the land.
Posted on 12/4/17 at 10:03 am to Mingo Was His NameO
As I understand your replies, each grantor has their own individual basis which was determined at the time of their own inheritences.
Thank you very much for responding.
Thank you very much for responding.
Posted on 12/4/17 at 10:26 am to CharleyLake
quote:
As I understand your replies, each grantor has their own individual basis which was determined at the time of their own inheritences.
Yes. As a quick example say two pieces of land where inherited, and placed in the LLC. Piece one had a FMV of $20,000 when inherited and was worth $50,000 when contributed. The contributor could be subject to a $30,000 built in gain. Now the land is sold for $100,000. We have a $80,000 gain (100,000-20,000), and $30k of that is built into the contributor. The remaining 50k is going to be split between the two members. So contributing member has a gain of $55k and member two has a gain of $25k.
I believe that's what your asking.
Posted on 12/5/17 at 8:41 am to Mingo Was His NameO
I know that each member's basis is preserved realative to the LLC Partnership. (24 members)
If I understand you, the built in gain will be calculated for each member to the extent that their tax basis was different than their fair market value of the property contributed.
That works for me. I imagine that the CPA who was engaged to prepare the 2017 LLC tax return will know how do this calcualation.
Thank you very much for taking your time to answer.
If I understand you, the built in gain will be calculated for each member to the extent that their tax basis was different than their fair market value of the property contributed.
That works for me. I imagine that the CPA who was engaged to prepare the 2017 LLC tax return will know how do this calcualation.
Thank you very much for taking your time to answer.
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