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Sold a business in 2017. Why are the asset sales that

resulted in a gain going...
Sold a business in 2017. Why are the asset sales that resulted in a gain going on line 6 of form 1065 yet the losses are going on form k-1 box 10?
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Answered in 6 minutes by:
3/14/2018
Brian Michels
Brian Michels, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 201
Experience: Partner at Michels & Hanley CPAs, LLP
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Hello. My name is ***** ***** I'll be the Expert assisting you today. I am a licensed CPA. I look forward to helping you with your issue today. The reason for the different locations depends on the types of assets sold (1231, 1245, 1250 assets), whether they were sold at gain/loss and if there was any depreciation recapture on those items. Box 10 is net section 1231 gain or loss. Let me know if you have any questions. If you have specifics on the transaction please provide.

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Customer reply replied 1 month ago
The two assets that resulted in a loss were leasehold improvements. The assets that resulted in a gain were furniture, computer, and equipment. The gain is going on line 6 and the loss for the leasehold improvement are going to K-1 line 10.

They are different classes of assets. Furniture, Computer and equipment are tangible personal property (section 1245) property, which is why they are going to that line. Leasehold improvements are different property according to IRS.

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Customer reply replied 1 month ago
you agree that the furniture, computer, and equipment gains should go to line 6 of 1065?Should leasehold improvements be going to k-1 line 10?

Yes. Leasehold improvements are Section 1231 property...different classification than 1245 property (furniture, equipment, etc.). Let me know if you have any questions. I'm happy to help.

Brian Michels
Brian Michels, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 201
Experience: Partner at Michels & Hanley CPAs, LLP
Verified
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