Liquidating distribution cash proceeds taxed

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Recognizing a loss on a liquidating distribution: V has a ,000 basis in L LLC, which is classified as a partnership.

1231 loss of 0,000, which will be ordinary, assuming he has no other Sec.

704(c)(1)(B)); (3) the distribution is within seven years after a contribution of appreciated property (see Sec. He has never contributed property other than cash to the LLC.

737); or (4) the distribution is part of a disguised sale (see Sec. A loss may be recognized upon a distribution in liquidation of a member's interest if no property other than cash, unrealized receivables, and inventory is received. Nontaxable liquidating distribution of cash and property: Z LLC is liquidating. To liquidate his interest, Z distributes to R ,000 cash plus real property with a ,000 FMV.

1231 The liquidation of an LLC may have a number of legal implications.

Under state law, there may be questions regarding who remains liable for LLC liabilities distributed to members, required notifications to creditors of the LLC's intent to liquidate, required changes in legal title to distributed assets, required notification to the state of the LLC's intent to liquidate, compliance with applicable bulk sales acts (if the LLC's assets are to be sold prior to liquidation), etc.

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