sale of members share LLC (S Corp) question

[nwtaxlady]

I have a new client. She sold her 50% interest of the LLC (S Corp) for $110,000 in 2016. She gave me the "Membership Interest Sale Agreement" and a list of payments she has received in 2016. The payments received in 2016 has added up to $10,000. She has a K-1 from this with the only figure on it is in box 1 of $8,500. The K-1 is not marked final.

How do I report this? What more information is needed? The K-1 was prepared out of state...my new client moved here from there (a State with no income tax).

Any help would be appreciated.

Thank You!!

[spanel]

I have a new client. She sold her 50% interest of the LLC (S Corp) for $110,000 in 2016. She gave me the "Membership Interest Sale Agreement" and a list of payments she has received in 2016. The payments received in 2016 has added up to $10,000. She has a K-1 from this with the only figure on it is in box 1 of $8,500. The K-1 is not marked final.

How do I report this? What more information is needed? The K-1 was prepared out of state...my new client moved here from there (a State with no income tax).

Any help would be appreciated.

Thank You!!

A few things to start.

The K/1 has nothing to do with the sale. That is her 50% profit/loss up to the point of the sale. Not marked final is fine, the scorp didn't dissolve.

You will report the sale stock of Scorp on a 6252 and will figure cost basis/selling price/proceeds received in 2016 on that form. (you will use this every year until all payments have been received).

Chris

[nwtaxlady]

reporting on 6252 ?

I have calculated her basis etc. When I report this on the form 6252, do I need to tell it to be taxed a certain way? Or is it just capital gains tax goes to Sch D and that's it? Or does it need to be taxed differently? Does it need to flow to a form 4797? It was a Childcare business that she sold her 50% interest. She had invested quite a bit of money so her Gross profit percentage is about 21%.

Thanks

[jmdcpa]

K1

If the K1 is not marked final, it's entirely possible the preparer didn't know about the sale of interest. I would ask for a full copy of the 1120S. to make sure her income is prorated based on date of sale.