Discussion:1031 Exchange and Form 8824
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Discussion Forum Index --> Advanced Tax Questions --> 1031 Exchange and Form 8824
Discussion Forum Index --> Tax Questions --> 1031 Exchange and Form 8824
| 13 March 2008 | |
| I have a client that was a member in real estate LLC. In mid 2007, the LLC sold its investment in a the sole property it owned. Prior to the sale, my client chose to enter into a tax free exchange and transferred her ownership interest from the old LLC to a newly formed LLC that used the proceeds to purchase other property. The transaction did qualify for a 1031 exchange - there is no doubt about this.
The problem I am having is one of logistics and reporting this transaction on the 8824. I know that all suspended losses remain suspended and basis carry over to the new entity. The IRS instructions and various threads I have read on this forum do not seem to address the specifics of how to correctly report this transaction. Because of depreciation over the years, the original LLC always had a loss but the client received basis because of the liabilities on the books. In the end, the losses were suspended anyway so there was no tax effect but I did not keep track of basis and would prefer not to go back to prior k-1's and start calculating basis. I had 2 questions - In a transaction like this, how would you go about figuring the specifics of what needs to be reported on the 8824? Is there a template of some sort that would help me populate the form? The wrinkle I have in this that she is just a member and I am concerned that the K-1 does not have all of the information I need in order to properly report this. As you can surmise, I am not very familiar with the 8824 and the instructions are not much help. Finally, any thoughts on how I should go about computing basis. Thanks in advance and any thoughts you have are extremely appreciated. Thanks | |
