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Second opinion] I recently liquidated my LLC. I'd like to…

Customer Question
Second opinion] Hello, Accountant's...

Second opinion] Hello,

Accountant's Assistant: Hello. How can I help?

I recently liquidated my LLC. I'd like to distribute the cash to my personal account and close the business.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Hello, I recently liquidated my business. I have about $100,000 in my businesses bank account and I like to distribute that cash to myself and close the business. What is the most tax effective way to write that off?

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I don't believe so. Ive received advise that claiming it as Capital Gains would give me a low taxable rate on the amount.

Submitted: 11 months ago.Category: Finance
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Answered in 6 hours by:
9/21/2017
Financial Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,213
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Welcome to Just Answer! Thank you for giving me the opportunity to assist you! I will do my best to help!

Please give me a few minutes to answer your question.

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Financial Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

Your LLC is a disregarded entity, unless you made an election to be treated as a corporation (S- or C-). So for tax purposes it does not exist. You have paid tax on the income as it has been earned. The income in the bank account is your after-tax profits. You can simply withdraw them as they are yours anyway, and the tax has already paid on it. There is nothing to write off, unless your initial investment in the company exceeds the cash that you want to take.

I hope this answers your question. If you have any more, please let me know and I will be happy to answer.

Thanks! Have a great week!

Roger

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Customer reply replied 11 months ago
How does this balance differentiate from our monthly guaranteed payments, in which we pay taxes?
Financial Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

Payments in liquidation are not from current income. They are not deductible for the partnership (since you said "we" I am assuming that your LLC has more than just you). For a partnership, a guaranteed payment is a deduction from the partnership income, and is not based on the income/loss/ownership allocation rules. A liquidating distribution is not deductible by the partnership, and is based on ownership, not income or loss.

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Financial Professional: taxmanrog, Certified Public Accountant (CPA) replied 10 months ago

Hi! Do you have any more questions? I have not heard back from you.

If you don't have any more questions, please don't forget to rate me, as that is how questions are closed.

Thanks!

Roger

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