Discussion:1031 Exchanges
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Discussion Forum Index --> Tax Questions --> 1031 Exchanges
| 17 February 2006 | |
| I have a client as an LLC in construction business with 3 members. They started 18 unit condo project in January of 2003. I know that the income from the sale of the units are considered ordinary income, but one of the members getting different messages from people in the same business that he could treat the income as capital gain rather than as an ordinary income. Is this true?
My second question is what if one of the members occupies one of the units. How he needs to treat this? Does he need to recognize (if any) ordinary or capital gain? | |
| 18 February 2006 | |
| You are correct, the income is ordinary. The second question is trickier. Is he going to take personal ownership of the unit? | |
| 20 February 2006 | |
| Yes, he's going to take ownership of one of the units as his principal residence. How can he treat this transaction? Does he need to recognize any capital gain or ordinary income?
Thank you so much for your help. | |
| 20 February 2006 | |
| LLC is treated as a partnership.
The condo the member takes title to will be a distribution to him. Treat as a partnership distribution. | |
| 20 February 2006 | |
| That is to say ...
Sections 731 and 732 should answer this. | |
| 20 February 2006 | |
| How about his cost in the unit?
Does he need to report the net amount which is the selling price and the cost to build as a distribution? | |
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