LLC owned storage unit rental which was sold in 2005. There is a rental loss for the year reported on K-1 but a very large 1231 gain on the sale of the building. The LLC still exists so although this was a complete disposition of the property, it was not a disposition of the LLC or the member's interest. Is the loss allowed?
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Why would the loss not be allowed? Basis? Passive activity? Both? -
1065 rental sale
The rental activity is passive and AGI is over 400,000 due to the gain on sale.Comment
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The 1231 gain is passive income also which should free up passive losses.Comment
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Thank you Veritas!
Thank you. I couldn't figure out why the 1231 gain wasn't allowing the losses but after reading your answer I went to input and noticed that there are 2 input lines for 1231 gain/loss - one for passive, which I did not notice when I originally input the K-1. The outcome made me think I wasn't really understanding what was supposed to happen even though I was certain I did. Anyway, thanks.Comment
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