Trnr395 Posted March 4, 2009 Report Share Posted March 4, 2009 Last year I did a 2 member LLC which is automatically classified as a partnership. This past December 31 one of the members of the LLC sold his 50% ownership to the other. So know I have a one member LLC which would typically file a schedule C return. I am not sure how to prepare this. I had prepared the return thinking that the sale didn't take place until the first of the year but just read over the legal doc's and it says dec. 31, 2008. Do I still file the partnership return like I have prepared and does the partner that sold his share still receive a K1. I haven't handled this situation before and am a little lost. Any help would be greatly appreciated. Thanks Brad Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted March 4, 2009 Report Share Posted March 4, 2009 Last year I did a 2 member LLC which is automatically classified as a partnership. This past December 31 one of the members of the LLC sold his 50% ownership to the other. So know I have a one member LLC which would typically file a schedule C return. I am not sure how to prepare this. I had prepared the return thinking that the sale didn't take place until the first of the year but just read over the legal doc's and it says dec. 31, 2008. Do I still file the partnership return like I have prepared and does the partner that sold his share still receive a K1. I haven't handled this situation before and am a little lost. Any help would be greatly appreciated. Thanks Brad Seems to me that for this year (2008) it would be handled like a normal two-person LLC...with K-1 going to each partner. This is the only way that both partners can claim their associated gain/loss for the year. Next year, it would just be a Sch C for the remaining taxpayer. Quote Link to comment Share on other sites More sharing options...
Trnr395 Posted March 4, 2009 Author Report Share Posted March 4, 2009 That is the way it done right now. Would the ending basis for the partner that has sold his share be 0 on his k1. I would assume it would have to be shown this way. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 4, 2009 Report Share Posted March 4, 2009 That is the way it done right now. Would the ending basis for the partner that has sold his share be 0 on his k1. I would assume it would have to be shown this way. Also, there is a box on the top of the 1065 to check for "final return". You may also have to file a 8308 to report the sale or exchange of certain Partnership Interests. Get Pub 541 for detailed assistance. Quote Link to comment Share on other sites More sharing options...
Trnr395 Posted March 5, 2009 Author Report Share Posted March 5, 2009 Should the member that sold his share know be shown as a 0 for ending capital account balance. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted March 5, 2009 Report Share Posted March 5, 2009 Both partners have zero ending balances. It is over, finished. Quote Link to comment Share on other sites More sharing options...
Trnr395 Posted March 5, 2009 Author Report Share Posted March 5, 2009 He pretty much sold his share for the amount that he had put into the business. How does this flow over to his personal return. Is it through the k1 for distributions or as capital gain/loss on schedule D?? Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted March 5, 2009 Report Share Posted March 5, 2009 http://www.irs.gov/businesses/partnerships...=134696,00.html Quote Link to comment Share on other sites More sharing options...
Trnr395 Posted March 5, 2009 Author Report Share Posted March 5, 2009 I understand how to calculate the gain or loss or the partners sale of ownership I am unsure how to report it and where. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted March 5, 2009 Report Share Posted March 5, 2009 So there are no hot assets or a Section 754 adjustment needed. There is nothing to record on the partnership books, unless the partnership terminated the retiring partner, and the other partner did not purchase the partnership interest. The sale of the partnership interest from one partner to another is not recorded on the partnership books, well, at least not directly, just like the sale of stock between shareholders is not recorded on the Corporate books. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.