LT Capital Gain?
Investor A (individual) contributed funds to real estate investment in Year 0. Investor A received proceeds including a gain from that investment in year 3. This info alone suggests LT capital gain for Investor A, correct? Here are other supporting details if they even matter: Investor group consisting of A and a third party LLC contracted with Seller of the property to buy that property with deposits in year 0, 1, 2 and 3 along with lump sum balance in year 3. The Investor group improved the property's entitlements over the 3 years and sold the property to an outside buyer in year 3, simultaneously receiving funds from the outside buyer and paying off the outstanding balance to the original Seller. Investor A was 100% passive participant while the LLC was actively involved in the entitlement improvements to the property. Still a LT capital gain for Investor A?