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RGMacEsq
RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11449
Experience:  Licensed Texas General Practice Attorney
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We sold our part of an LLC in Texas, two years ago, and the

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We sold our part of an LLC in Texas, two years ago, and the sole owner signed us a promissory note of payment to be paid after two years, so we are going to look for this payment. In 2011 and 2012 we didn´t report to IRS that we are out of this business, I want to know what kind of report we have to make, or if we have to wait until the payment is realized.
Submitted: 1 year ago.
Category: Business Law
Expert:  RGMacEsq replied 1 year ago.

RGMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

RGMacEsq :

Was the LLC taxed as a corporation or a partnership?

RGMacEsq :

My apologies, but I must assist the other customers that are waiting. Once you respond to my follow up question, I will respond as soon as I can. Please note that I may be assisting other customers or otherwise out of the office (depending when you respond). Thank you.

RGMacEsq :

Did you see my follow up question to your issue?

Customer:

It was a partnership, we were three persons, one had the 51 % and the other two share the 49%

Customer:

We, who have the 49% transfer it to the one person who had 51%, and she signed a promissory note of payment

RGMacEsq :

Thank you. Assuming that the LLC (which being taxed as a partnership, files partnership documentation) filed a 1065 (partnership tax return) that indicated the change in the ownership structure, the partnership would need to file a Form 8308. When a partnership is notified of an exchange of partnership interests involving unrealized receivables or inventory items, the partnership must file Form 8308. Form 8308 is filed with Form 1065 for the tax year that includes the last day of the calendar year in which the exchange took place. If notified of an exchange after filing Form 1065, the partnership must file Form 8308 separately, within 30 days of the notification. On Form 8308, the partnership provides its telephone number and states the date of the exchange and the names, addresses, and taxpayer identification numbers of the partnership filing the return and the transferee and transferor in the exchange. The partnership must provide a copy of Form 8308 (or a written statement with the same information) to each transferee and transferor by the later of January 31 following the end of the calendar year or 30 days after it receives notice of the exchange. The partnership may be subject to a penalty of up to $100 for each failure to timely file Form 8308 and a $50 penalty for each failure to furnish a copy of Form 8308 to a transferor or transferee, unless the failure is due to reasonable cause and not willful neglect. If the failure is intentional, a higher penalty may be imposed. See Internal Revenue Code sections 6722, 6723, and 6724 for details.

RGMacEsq :

Again, this is on the partnership, not you, to file this, and you would not be liable for any failure to do so.

RGMacEsq :

You would need to report the income as ordinary income from the sale of a business as it comes in. So if you have a promissory note that pays, say, $100,000 a year for 10 years, you don't report $1,000,000 the first year, but as you actually earn it.

RGMacEsq :

So once you get the money, you're going to report that.

RGMacEsq :

Depending on the amount that you actually received, you will want to make certain that you have a tax accountant prepare your return the year that you actually get paid.

RGMacEsq :

Again, the LLC, since the LLC continued without you, would be required to file the documentation regarding the change in ownership and the sale of the interest.

RGMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

RGMacEsq :

Did you have any other questions before you rate this answer?


Customer:

We still don´t receive any payment until next January 2013. We haven´t done any declaration, the last one was in 2011, but it was of the year 2010.

Customer:

But if I didn´t have any income in 2011 and 2012, do I have to file something?

RGMacEsq :

Not yet. Only when you have realized income from the sale do you have anything that is reportable.

Customer:

No, we don´t have anything that is reportable

Customer:

Thanks a lot!

RGMacEsq :

Okay. And when you do, that's when you're going to need to file with the IRS. Again, the LLC is responsible for the filings regarding the LLC.

RGMacEsq :

My pleasure.If you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11449
Experience: Licensed Texas General Practice Attorney
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