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I bought and sold an investment property through an LLC

Submitted: 3 months ago.Category: Finance
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4/2/2018
Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Finance
Satisfied Customers: 2,641
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Customer reply replied 3 months ago
I bought and sold an investment property in 2017 using an LLC. The cost of purchase and all expenses to rehab were shared between myself and a business partner, however, upon reviewing the state filing, he was never added to the LLC. The sale of the property resulted in a loss after expenses. I received a 1099 from the sale which shows $488,000 in income to report. My question is, will he be able to deduct all of his expenses if he was not officially on the LLC per the state filing?
Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago

If he didn't have ownership interest in the property then he would have to claim his expenses and income using Schedule C Profit or Loss from Business (Sole Proprietorship)

Below is a link to the Schedule C for your convenience.

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Please let me know your follow up questions.

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Customer reply replied 3 months ago
would we just evenly split the amount reported on the 1099 from the property sale?
Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago

No, you don't split the amount on the 1099.

You will report the sale of the investment property using Form 4797 and Schedule D. Your expenses will be listed on Schedule E or Schedule C depending on if you are a real estate professional or not.

Your partner has acted as a sub contractor in this particular case because he did not have ownership in the home. ---How you determine what he is paid will depend on your agreement.

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Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago

Please let me know if this has answered your question or if you have any additional questions.

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Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago

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Financial Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 3 months ago

Hello,

Are you satisfied with the Answer you received?

If you have any follow up questions please don't hesitate to Ask.

You can rate me by using the stars, or faces on your screen and clicking submit

I look forward to working with you in the future and I hope you feel that I provided you with 5 Star services

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Chad CFP ® professional

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