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ShawnA
ShawnA, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
Category: Tax
Satisfied Customers: 2884
Experience:  CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
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I have a LLC and am filling out my 1065 k-1 (partnership) for

Customer Question

I have a LLC and am filling out my 1065 k-1 (partnership) for a LLC member right now.
My member contributed $10,000 in capital to the partnership in fiscal year 2012; in fiscal year 2013 due to business losses, he was able to take $1,205.59 in losses, thereby reducing his capital account to $8,794.41. We did not have any business activity after fiscal year 2013.
In fiscal year 2012, the LLC purchased a vehicle for business purposes for $10,000. We never reported depreciation for the vehicle in our tax forms.
In fiscal year 2015, the LLC sold the vehicle and received $16,843,59 in proceeds. This was distributed to the members -- the member received $5,614.53 per his distribution interest.
My question is whether the capital account 2015 current year decrease (per Line L of Part 2 of the K-1) of $3,080.21 ($8,794.41-$5,614.53) is considered a net section 1231 loss on Part 3 line 10 of the K-1. Does any of it fall under Part 1 line 1 of the K-1 (ordinary business loss)?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
One more thing to note is that our business has no more assets and we have closed the business in fiscal year 2015.
Customer: replied 1 year ago.
So we have closed the capital account to 0 (which explains the 3,080.21 number) for the member.
Customer: replied 1 year ago.
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Expert:  ShawnA replied 1 year ago.
I will offer a call as requested.