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Old 10-03-2017, 01:50 PM
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Capital Gains from LLC Owned Real Estate

My mother is in her upper 80s. She has not filed taxes for many years and her only income is Social Security in the amount of less than $800 per month. She is a partner in an LLC that has not reported any income or expense but holds some real estate. They are now going to sell the real estate and pay out the partners. What kind of return will she have to file and at what rate will this likely be taxed at? (The entire amount will be capital gains and the total $ should be more than 300,000 and less than 500,000.) Also could she reinvest this as an individual using a 1031 exchange?



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Old 10-04-2017, 04:32 AM
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My mother is in her upper 80s. She has not filed taxes for many years and her only income is Social Security in the amount of less than $800 per month. She is a partner in an LLC that has not reported any income or expense but holds some real estate. They are now going to sell the real estate and pay out the partners. What kind of return will she have to file and at what rate will this likely be taxed at? (The entire amount will be capital gains and the total $ should be more than 300,000 and less than 500,000.)======>>I guess possibly higher than 33%.it depends on her MAGIwhether or nor she needs to file her return; her distributive share of partnership income, gains, losses, deductions, or credits generally is based on the partnership agreement. Your mother must report her distributive share of these items on her return whether or not they actually are distributed to her.The rule of thumb for taxing Social Security benefits is whether her Modified Adjusted Gross Income is more than her Social Security base amount. If her MAGI is higher than the base amount part of her benefits may be taxed. This means she needs to know her MAGI and her Social Security base amount. her MAGI is calculated as: 50% of her Social Security benefits plus all other income, including tax-exempt interest.Also it depends on her taxable income ; The Federal income tax has 7 brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. her taxable income can be substantially less than your AGI.you may check her possible tax rate on the website here; https://taxfoundation.org/2017-tax-brackets








Also could she reinvest this as an individual using a 1031 exchange?=========>> A partnership can distribute real property to its partners so that the partners can exchange the property in a Sec. 1031 like-kind exchange; if the exchange is properly structured, some of the partners can trade their interests in the property distributed in Sec. 1031 exchanges and some of the partners can sell their interests in the property in taxable transactions.



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