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Old 04-06-2015, 02:03 PM
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sale of LLC interest by estate


I am filing a 1041 for my late husband's estate. Tom inherited a 50% interest in a land development LLC in 2006 at a value of approximately $148,000. His death was early in 2014 and I am filing a short year 1041.
In 2014, the 50% interest was appraised at $80,000 and sold for $50.000. The $80,000 value will be reported on Form 706 in inventory by the attorney.
Is this the sale of business property and reportable on Form 4797, or is it a capital sale to be reported on Schedule D?
I am the only beneficiary and would like to know the timing of the loss flowing to my personal return.
The difference between these options is how the loss is applied, right? If Scehd D, then limited to $3000, if Form 4797 entire loss could be taken this year (thus I would convert traditional IRA to Roth).

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Old 04-07-2015, 01:35 AM
Join Date: Oct 2010
Posts: 5,241
correct;you will automatically inherit his llc ownership interest unless the operating agreement says otherwise. If you don't have any capital gains or if your capital losses exceed your capital gains, you can deduct the net capital loss on your tax return. That way you could reduce other income, such as wages, up to an annual limit of $3k, or $1.5k if you are married filing separately.
the sale of a deceased person's property is usually considered the sale of a capital asset and may be subject to capital gains or loss treatment. In administering / winding up a deceased estate,YOU, AS a legal personal representative, may need to dispose of some / all of the assets of the estate. If you are a deceased person's legal personal representative or a beneficiary of a deceased estate, special capital gains tax rules apply to the transfer of any CGT assets. Assets disposed of in this way are subject to the normal rules and any capital gain you make on the disposal is subject to capital gains tax . also, any capital gain or capital loss you make on disposal of that asset to the beneficiary is subject to the normal CGT rules;when a beneficiary sells an asset they have inherited, the normal CGT rules apply.

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