Capital Gains and Losses

Capital Gains Tax Questions? Ask a Tax Advisor for Answers ASAP

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

How would a return on Capital be treated? Interest income to…

How would a return on...
How would a return on Capital be treated? Interest income to recipient?
Show More
Show Less
Ask Your Own Capital Gains and Losses Question
Answered in 15 minutes by:
3/26/2018
Carter McBride
Carter McBride, Professor
Category: Capital Gains and Losses
Satisfied Customers: 1,276
Experience: Adjunct Professor
Verified
Hey! I'm Carter, I'm a CPA.
Return on capital is not taxed, unless it's a distribution that is in excess of basis. If it's in excess of basis, it is a long term capital gain.
Let me know if you need anything else. If not, please leave a rating. Thanks!
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
Let’s say I invested $85K into an LLC. Someone else purchased my interest this year and I received my $85K back plus additional $10k. How do I treat this?
That would be a capital gain.
You would need to calculate your basis if it's an S Corp or partnership. And your gain is your proceeds less basis.
If it's a disregarded LLC, then your gain is $10,000, long term capital.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
How does LLC deduct $10k so to speak?
Customer reply replied 3 months ago
It’s a partnership
The LLC does not do anything. You would handle it on your personal taxes.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
What does LLC code check to that was written to shareholder
That's a distribution.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
What are preferred returns of capital?
You would need some kind of preferred preference where the investor gets their initial investment back along with a set percentage return on their investment before any of the other investors get a penny.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
That’s what happened here. So the original investor put in $85k and was owed $10k on the preferred return of capital. Another investor bought him out and paid him the $85k and $10k preferred return. Does this get adjusted through new investors capital account? And to refer to what you said above the $10k would be reported by shareholder on their personal 1040 as long term capital gain?
That would all be done outside the partnership. You'll do a final K-1 for the partner and zero out his capital account for year end. That partner will calculate his basis and report a gain or loss on Schedule D of his 1040. If the partnership has hot assets you also need to file Form 8308.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
hot assets?
Unrealized receivables or inventory. Basically anything that would be reported as ordinary income sometime in the future of the partnership.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
They do have receivables. A lot actually. No inventory though.
If they're accrual based, then it won't be a hot assets, if they're cash based, they would be
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
What do you mean by accrual based vs. cash based in regards ***** ***** accounts receivable?
These are complicated. Check this article out on hot assets and it should explain what they are pretty well
https://www.cengage.com/resource_uploads/static_resources/0324304838/6668/definitions-11.html
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
Thanks and YES complicated. The receivables are from funding. They front an individual $ and then will receive that money back plus a fee. Which will produce ordinary income. So I am thinking Form 8308 will be needed here?
Yea sounds like it. Plus it's just a reporting form, so no harm in doing it.
Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
I HAVE NEVER DONE THIS FORM BEFORE... IS IT DIFFICULT TO FILL OUT?

It's not hard at all.

Ask Your Own Capital Gains and Losses Question
Customer reply replied 3 months ago
Wanna do it for me lol?
Customer reply replied 3 months ago
just looked at the form. so no numbers go on this form just the original owner and new owners info?
On the K-1 for the partner who was bought out (mentioned above)... his beginning ownership would be lets say 10% and then his ending is 0% with no activity except the capital account?

Yea. The forms easy to do.

Yea, that's fine on the K-1 too.

Carter McBride
Carter McBride, Professor
Category: Capital Gains and Losses
Satisfied Customers: 1,276
Experience: Adjunct Professor
Verified
Carter McBride and 87 other Capital Gains and Losses Specialists are ready to help you
Ask your own question now
Customer reply replied 3 months ago
Thanks. May I bug you again if needed?

of course!

Ask Your Own Capital Gains and Losses Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax expertLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Carter McBride Your Own Question
Carter McBride
Carter McBride
Carter McBride, Professor
Category: Capital Gains and Losses
Satisfied Customers: 1,276
1,276 Satisfied Customers
Experience: Adjunct Professor

Carter McBride is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

R. Klein, EA

R. Klein, EA

Enrolled Agent

263 satisfied customers

Over 20 Years experience in resolving tough tax cases

jgordosea

jgordosea

Enrolled Agent

173 satisfied customers

As an Enrolled Agent you can be ensured of my competence in income tax matters.

PhillipB EA

PhillipB EA

Accountant

130 satisfied customers

Enrolled Agent with 8 years experience in tax return preparation, representation, and taxpayer consultation

Arthur Rubin

Arthur Rubin

Tax Preparer

77 satisfied customers

Over 22 years of tax preparation experience.

Bill-the-CPA

Bill-the-CPA

Certified Public Accountant (CPA)

55 satisfied customers

Seasoned professional with over 15 years in public accounting. Income, sales and property tax. Also accounting/tax software.

FredStevens

FredStevens

Accountant

37 satisfied customers

Experienced in business, accounting and tax planning for individuals, small/medium sized businesses and non-profit organizations

Shane-CPA

Shane-CPA

CPA, PFS, CGMA

11 satisfied customers

Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant

< Previous | Next >

Related Capital Gains and Losses Questions
I sold my equity in a mini storage to my son. I took a note
I sold my equity in a mini storage to my son. I took a note from him for for 20 years at a 5 per cent interest rate. My accountant is using all payments as straight income. Can or should the principal… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I'm back. On April 5 in our conversation, you said that the
I'm back. On April 5 in our conversation, you said that the trust should "enter the capital loss on 1041 K-1, line 4a.....check the box on the form to show this is not the final K-1." I was thinking t… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Can you structure a loan such that the return on the loan is
Can you structure a loan such that the return on the loan is treated as a capital gain? I heard about performance based loans whereby the return on the loan is linked to an index e.g. stock market and… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
If I carry the note on the sale of investment real estate,
If I carry the note on the sale of investment real estate, do I pay capital gains on the profit at point of sale, or only on income generated per year?… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I own 2 homes here in Utah that I have rented little over 6
I own 2 homes here in Utah that I have rented for a little over 6 years. I have a little over 120K in equity in one of the homes and was considering selling it and then re-investing the returns into t… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Property sale $720,000 Basis $380,000 Expenses est. $40,000
Property sale $720,000 Basis $380,000 Expenses est. $40,000 Property is in a trust with 3 daughters (not brother), court supervised agreement stipulates 50% of net sale proceeds is to be paid to broth… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I am the co-founder of a business that has yet to be
Hi,I am the co-founder of a business that has yet to be incorporated as a c-corporation in Delaware, US. We have brought on a co-founder and given him equity as compensation. He is an experienced cons… read more
Jason M. Tyra, CPA
Jason M. Tyra, CPA
Principal
Master\u0027s Degree
167 satisfied customers
I have a partnership interest in a limited partnership. My
I have a partnership interest in a limited partnership. My interest in the partnership is being bought out by another firm. I received a partial amount in 2014 and the remainder will be in 2015. For t… read more
TaxTom
TaxTom
Accountant
Bachelor's Degree
14 satisfied customers
if a recipient of a grat trust receives funds from a
if a recipient of a grat trust receives funds from a property sale held in that grat into their own personal trust account, do they pay the capital gains according to their income bracket? or is it a … read more
TaxTom
TaxTom
Accountant
Bachelor's Degree
14 satisfied customers
SHORT TERM CAPITAL GAIN, 10,000, YET TOO LITTLE INCOME TO EVEN
SHORT TERM CAPITAL GAIN, 10,000, YET TOO LITTLE INCOME TO EVEN FILE A 2014 RETURN. AM I REQUIRED TO FILE A RETURN UNDER THESE CIRCUMSTANCES ? i'M 87 YEARS OLD. haven't FILED A RETURN LAST 4 YEARS. GAI… read more
abci168
abci168
Principal
27 satisfied customers
French citizen has a US securities account at TD Ameritrade.
French citizen has a US securities account at TD Ameritrade. I have been informed by TD Ameritrade that there will be withholding on Interest & Dividends but not Sales of securities. Assuming profitab… read more
jgordosea
jgordosea
Enrolled Agent
Bachelor's Degree
173 satisfied customers
If the purchase price cannot be calculated because the price
If the purchase price cannot be calculated because the price is payable in continuing installments over the lifetime of the seller, how are capital gains on the sale (of securities in a closely-held b… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I own an oil and gas company and we are selling our working
I own an oil and gas company and we are selling our working interest in a oil field. We should get between 2 and 3 million for it and after paying off debts and other investors I will end up with appr… read more
USTaxAdvising
USTaxAdvising
Partner
Bachelor's Degree
609 satisfied customers
Hello - My wife had $250,000 invested in a company that provided
Hello - My wife had $250,000 invested in a company that provided loans to the long-haul trucking industry. The 250k purchased loans (which my wife would technically then own) which the finance company… read more
R. Klein, EA
R. Klein, EA
Enrolled Agent
Master's Degree
263 satisfied customers
Hypothetically, is a $11.842.00 stock loss on a $ 41,000.00
Hypothetically, is a $11.842.00 stock loss on a $ 41,594.00 original long-term investment non- deductible? We received $ 29,000.00 this 11/27/12.… read more
R. Klein, EA
R. Klein, EA
Enrolled Agent
Master's Degree
263 satisfied customers
How can we avoid capitol gains taxes by deeding property to
how can we avoid capitol gains taxes by deeding property to our son. It is currently a rental, but he wants to move in and purchase it.… read more
R. Klein, EA
R. Klein, EA
Enrolled Agent
Master's Degree
263 satisfied customers
my wife sold a property in India and almost 99 prcent of the
my wife sold a property in India and almost 99 prcent of the proceeds are capital gains, amounting to about Rs. 40 million ( Approx. $834,000) She paid 20 percent of that amount as capital gains tax t… read more
R. Klein, EA
R. Klein, EA
Enrolled Agent
Master's Degree
263 satisfied customers
two tax questions: first, I founded a company in 2007 and
two tax questions: first, I founded a company in 2007 and planned to sell financial advisory newsletter. However, the global financial crisis keeps me earning money, instead, all my money in the compa… read more
Bill-the-CPA
Bill-the-CPA
Certified Public Accountant (CPA)
Master's Degree
55 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x