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Old 01-07-2019, 02:55 PM
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Gain on involuntary conversion LLC question

Our LLC suffered a fire in February 2018. We have a $70,000 gain on the insurance proceeds versus depreciated basis on our assets. When I report the info on form 4684 it flows to form 4797 thru my LLC correct? And can I offset the gain from involuntary conversion with a $80,000 capital loss carryforward on my personal return?



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Old 01-07-2019, 06:59 PM
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Our LLC suffered a fire in February 2018. We have a $70,000 gain on the insurance proceeds versus depreciated basis on our assets. When I report the info on form 4684 it flows to form 4797 thru my LLC correct?================>>correct.since you have a gain to biz property , you need to complete Sec. B of Form 4684 and then transfer the gain or loss to Form 4797.



And can I offset the gain from involuntary conversion with a $80,000 capital loss carryforward on my personal return?===============>>aslongas your MMLLC is a disregarded entity I mean SMLLC, then in general, capital losses must first be used to offset any capital gains in the current tax year. you can use $3k of the capital loss to deduct against ordinary income. Say, you have a $10k capital loss and NO capital gain and say your ordinary income is $50k you will get to deduct the $3k of capital loss, and so you will only pay tax on $47kof ordinary income. The remaining $7k of loss can be carried forward to the following year.

In the case of MMLLCs treated as partnerships, these institutions cannot claim NOLs. Instead, the individual members can use the income/ losses to calculate NOLs for their personal returns of 1040S not on 1965. The amount of losses a member can claim on her personal return depends on her basis in the LLC, or the amount of after-tax investment she has made in the biz This amount is calculated on Sch K1 of 1065 for each member. Any losses in excess of a member?s basis cannot be claimed on a personal return in that year.



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