Discussion:1031 exchange recording for LLC 1065 return

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Discussion Forum Index --> Advanced Tax Questions --> 1031 exchange recording for LLC 1065 return
Discussion Forum Index --> Tax Questions --> 1031 exchange recording for LLC 1065 return

Psimeone (talk|edits) said:

15 March 2008

I am working on a LLC tax return for a Partnership (Form 1065) and they have done a 1031 exchange this year for business real estate property. I have recorded the 1031 exchange on form 8824 and it appears correct as they have a deferred gain on line 24 and their basis in new property is adjusted accordingly. I am now not sure how this flows to form 4797. I have included on line 5 and 16 on form 4797. It then flows to line 10 on form 1065 schedule K as 1231 exchange and then on individual k-1's on line 10 net 1231 gain. I am not sure if this is correct as I believe since it is deferred that it should not be reported on the individual k-1's at this time. Please help.

thank you,

Paula Simeone

Psimeone (talk|edits) said:

18 March 2008

I spoke to the IRS regarding the above issue I was having with the 1031 exchange. Note if there is a deferred gain on line 24, no need to report on form 4797 or Schedule D until the gain is realized. I had an issue with my schedule m-1 on the partnership tax form 1065 as my book balance included the deferred gain, which I believe is correct, but I would like to hear from someone else. I adjusted #6 on M-1, so the deferred gain was an adjustment from book income to tax income. The IRS agent could not help with the books. He asked why I am even recording the gain on the books. I believe it should be recorded for book purposes as it is a true gain even though for tax purposes it is deferred. I would appreciate, some feed back.

thanks Paula