How to increase capital for Redemption of Membership Interest

Forum|Forum|3 years ago
March 9, 2023
1 reply
12 views

Member C transfered membership interest to LLC that results in LT capital loss for Member C. I am showing the loss as a Sch K asset disposition (Screen 19)- which is zero's out Member C's capital account. I am then entering an M1 adjustment for "deduction of included on sch k but not on books" to reconcile Income.

It seems the only way I can transfer Member C's capital to the remaining two members is via an M2 adjustment of misc increase in Capital and then specially allocate.

The goal is to show Member C's capital loss, but no capital gain for the other members (which is triggered when I select "Amount of Loss that is nondeductible" (Screen 19); which would not require an M1 adjustment, bu would then show a corresponding capital gain to the other two members.

Any help would be appreciated.

Lacerte Tax

This topic has been closed for replies.

sjrcpa

Level 15

You do not claim a loss for redeeming a member's interest. For the LLC this is an equity transaction.

If member C has a loss on the transaction it goes on Member C's tax return only.

Other increase/decrease in capital is how you zero out C's capital account and transfer to A and B.

The more I know the more I don’t know.

D

dhdobbinAuthor

Level 3

Thank you, so if this is strictly an equity transaction, which it pretty much is, there is an exchange of a small cash payment and customer list, do you know if 8303 is required to be filed?

sjrcpa

Level 15

8303?

The more I know the more I don’t know.

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded