Sale of rental on LLC

[Super Mom]

Ok, this is a new one, just want to be sure I do it right. I have an LLC that sold a rental house on installments. My understanding is that I figure the total gain at the stated sales price. (I understand basis and depreciation, no question there) Then, on each installment I apply the profit % to get the gain for that installment and the interest is ordinary income. It would appear I report this on 4797 and 6252. Is that right?

[Super Mom]

and this would be section 1231 gain flowing to line 4 of 4797 from the 6252 form right?

[Burke]

Ok, this is a new one, just want to be sure I do it right. I have an LLC that sold a rental house on installments. My understanding is that I figure the total gain at the stated sales price. (I understand basis and depreciation, no question there) Then, on each installment I apply the profit % to get the gain for that installment and the interest is ordinary income. It would appear I report this on 4797 and 6252. Is that right?

Yes. Keep in mind you must report any 1250 recapture @ 100% in the year of sale, regardless of the amount of money received. Even if there was no payment in year of sale.

[TaxGuyBill]

Yes. Keep in mind you must report any 1250 recapture @ 100% in the year of sale, regardless of the amount of money received. Even if there was no payment in year of sale.

If you actually mean "1250 recapture" (depreciation in excess of Straight-Line Depreciation), I agree. However, if you mean Unrecaptured Section 1250 Gain, that's not correct.

Section 1245 property pays all depreciation recapture in the year of sale, regardless of payments. I think that would also apply to true 1250 "recapture" (depreciation in excess of Straight-Line Depreciation).

If you are referring to Unrecaptured Section 1250 Gain, the tax is still based on the taxable portion of the income received. If I remember correctly, the taxable portion of the principal payments are first applied to Unrecaptured Section 1250 gain. When that has been paid, then the taxable portion of the principal payments are applied towards 'regular' long-term capital gain.