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: 1,038
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 26 days 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 26 days ago
How does LLC deduct $10k so to speak?
Customer reply replied 26 days 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 26 days 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 26 days 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 26 days 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 26 days 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 26 days 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 26 days 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 26 days 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 26 days 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 26 days ago
Wanna do it for me lol?
Customer reply replied 26 days 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: 1,038
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 26 days ago
Thanks. May I bug you again if needed?

of course!

Ask Your Own Capital Gains and Losses Question
Was this answer helpful?
Ask Carter McBride Your Own Question
Carter McBride
Carter McBride
Carter McBride, Professor
Category: Capital Gains and Losses
Satisfied Customers: 1,038
1,038 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
May I have a question of foreign capital loss on form 1116,
May I have a question of foreign capital loss on form 1116, pls?A US citizen has $5000 foreign capital loss, $5,000 foreign interest income and all income are passive and paid $800 foreign tax. Per fo… read more
taxmanrog
taxmanrog
Master\u0027s Degree
904 satisfied customers
Keying in security transactions for capital gains and
keying in security transactions for capital gains and losses. I've filled up all the spaces on the form , yet I still have several to declare. How do I get extra lines or supplementary schedule to com… read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
I have a very complex situation. My house has been in
I have a very complex situation. My house has been in preforeclosure for several years while I struggled with the bank in an attempt to get a loan modification. Not happening. Now I have to sell while… read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
My Accountant says I owe $17,000.00 in depreciation recovery
My Accountant says I owe $17,000.00 in depreciation recovery tax and capital gains tax after selling my rental property in July 2017. … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,064 satisfied customers
For 2018 I will have total income of approximately
For 2018 I will have total income of approximately 475,000.00 I will have income of approximately 340,000.00 of long term capital gain what is my tax rate … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,064 satisfied customers
I'm a single homeowner/ disable veteran who wants to sell. I
I'm a single homeowner/ disable veteran who wants to sell. I need to know if it's possible to protect the money over $200.000 bying another house, or, should I be putting in a certain type of account?… read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
I recently sold a property. The sale price was $835k. The
I recently sold a property. The sale price was $835k. The cash payout from fire damage was $447k.The adjusted basis of property is aprox $382k.What would I owe for federal tax and CA? And when should … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
What is the basis for gain on community property closely
what is the basis for gain on community property closely held S corporation stock? IRS Pub 551 and IRC code section 1014 says it is FMV at date of death if the property was includible in decedent's fe… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
828 satisfied customers
I have a rental home in Utah and my wife and I thinking of
Hello. I have a rental home in Utah and my wife and I thinking of selling it due to the hotter market here. I was hoping you may be able to help me with calculating how this would impact me financiall… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
In what ways does the new Tax Law benefit a retired investor
HelloIn what ways does the new Tax Law benefit a retired investor in terms of the withdrawals from investments for income?… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
828 satisfied customers
Trying to finish up my taxes in turbotax. I bought a
Trying to finish up my taxes in turbotax. I bought a building in 2017 for a business I opened. I spent about $75,000 fixing it up so far. I had to replace 3 HVAC units at a cost of about &19,000 but c… read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
I have 7 siblings who inherited and investment brokerage
I have 7 siblings who inherited and investment brokerage account from our deceased mother. We were all given a K1 form to pay taxes 14% on $138 capital gains which comes to about $20. We are told on l… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
828 satisfied customers
I own a primary residence in California. Thinking of renting
I own a primary residence in California. Thinking of renting it out in October 2018. The house could do with a new fence and carpet before renting it out. Does it behoove me to wait until tenants are … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,931 satisfied customers
My sister and I together with my two brothers inherited
My sister and I together with my two brothers inherited property (a 3 family house) owned by my Mother. When my sister filed a tax return one of the … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,931 satisfied customers
I'm trying to obtain a free record of account from the IRS
I'm trying to obtain a free record of account from the IRS for an LLC partnership of which I am a member. Should line 1a be the name of the LLC or my name?… read more
Arthur Rubin
Arthur Rubin
Tax Preparer
Doctoral Degree
77 satisfied customers
I have a friend who owes me 5,500$. He transfered his title
I have a friend who owes me 5,500$. He transfered his title of his mobile home that he owns to me in order for him to take a loan out from his thrift savings plan. The only way he could get the loan i… read more
Carter McBride
Carter McBride
Professor
1,038 satisfied customers
I paid $150 for my "fixer" 31 years ago. I want to sell it
I paid $150 for my "fixer" 31 years ago. I want to sell it and move to GA and buy another home. Substantial $$ were paid to make the house livable and then additional $ upgrade were done over the year… read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
Now another questions. We each can give each son $14K a year
Thanks. Now another questions. We each can give each son $14K a year without their having to pay taxes as far as I know. However if we were to give them a much larger lump sum it would be taxed. Howev… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,931 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