Discussion:Sale of partnership interest - Ordinary loss under Sec 751
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
Revision as of 17:42, 10 December 2008
Discussion Forum Index --> Advanced Tax Questions --> Sale of partnership interest - Ordinary loss under Sec 751
Discussion Forum Index --> Tax Questions --> Sale of partnership interest - Ordinary loss under Sec 751
| December 10, 2008 | |
| LLC taxed as partnership organized for the sole purpose of developing commercial building for resale. Therefore, income from sale of building would be taxed as ordinary. Due to current economy, the building is now worth less than the construction loan and less than the LLC's basis in the land and construction costs. LLC is currently in discussions with bank, resolution (foreclosure) will not occur until 2009.
Some members of LLC wish to recognize loss in 2008, by selling their interest for $1 to managing-member. Would the underlying assets of LLC be considered hot assets (inventory) thereby requiring the collapsible partnership provisions of Section 751(b)? And therefore, would the selling partners be allowed an ordinary loss for the sale of their partnership interest? | |
