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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Capital Gains and Losses
Satisfied Customers: 263
Experience:  Over 20 Years experience in resolving tough tax cases
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I'm starting a llc in Minnesota for home rehabs, I have a

Customer Question

I'm starting a llc in Minnesota for home rehabs, I have a partner, should he do his own llc and we buy together or should we do a multiparty llc ? when it come to paying taxes on sold properties witch is the easier way to go?
JA: Excellent. The Accountant can walk you through setting up an LLC or see if that's the best choice for what you want. Is there anything else the Accountant should be aware of?
Customer: not really, .....if I sell a property and profit 40k and use that money to buy another property how do I get taxed on the capital gains through a llc
Submitted: 9 months ago.
Category: Capital Gains and Losses
Expert:  ABC Accounting Group replied 9 months ago.

Hi. Great Question.

I will give you the two options:

You would be able to form an llc partnership. You would have to fill out a 1065 at year-end - the income would flow to your k-1's, flowing to your individual returns. You could defer the gains by doing a 1031 election, on the partnership level. But, for partnerships, tax issues can happen when one partner has a different investment goal and decides to go a different direction. However, if you do not think that would be an issue, then the partnership is easier, in the long run. Advanced legal and tax planning is crucial to prevent disallowance of the 1031 Exchange when this occurs.

You could, also, structure it in a way that with separate LLC's, each of you would have a business and claim the 1031 exchange. But, the contracts/documentation (who paid for what, etc.) would have to be very detailed. That I would definitely contact a lawyer on.

Expert:  ABC Accounting Group replied 9 months ago.

Let me know if you have any questions. Thank you.