Now that I've vented, I'll try to get down to the facts! (Recently completed an S-corp selling its assets and dissolving, so am mixing up in my mind with this totally different situation.)
Husband and wife only members in an LLC taxed as a partnership are selling their entire LLC interest to an outside company. Ended 2006 with $150,000 basis and expect a $180,000 profit to sale date for 2007. Selling for $350,000. The LLC owns depreciable assets originally $46,000 now booked at $8,000 and intangibles of $1,700 booked at $60. LLC on cash basis. However, if I run their QB balance sheet in accrual mode, LLC shows $320,000 in AR and $70,000 AP. Now, I've been talking to owner about cleaning up his QB file, but he's pretty good so that might be the real AR amount. Sale contract does not value different parts of the company, since buyer is purchasing interest directly from the current owners/members.
Do I need to use AR for a cash basis LLC in dealing with this sale?
Do I work with the LLC as if it's "selling" all its assets to the members for FMV?
What would be FMV for used equipment if neither the buyer or the seller will put a number on it? Very specialized, little resale market except when some one buys the corresponding business.
Is this phantom sale by the LLC a calculation I make to work with the joint Form 1040? And, not reported on Form 1065?
Is the final Form 1065 just reporting business as usual until the sale date? But, I need to make distributions to the members in an amount to zero out the lines on the balance sheet?
I've been trying to step through this, getting through the 1065 to have the numbers to move on to the 1040. But, I keep getting detoured with how I had to deal with an asset sale by an S-corp and losing focus on this sale by members in an LLC.
Husband and wife only members in an LLC taxed as a partnership are selling their entire LLC interest to an outside company. Ended 2006 with $150,000 basis and expect a $180,000 profit to sale date for 2007. Selling for $350,000. The LLC owns depreciable assets originally $46,000 now booked at $8,000 and intangibles of $1,700 booked at $60. LLC on cash basis. However, if I run their QB balance sheet in accrual mode, LLC shows $320,000 in AR and $70,000 AP. Now, I've been talking to owner about cleaning up his QB file, but he's pretty good so that might be the real AR amount. Sale contract does not value different parts of the company, since buyer is purchasing interest directly from the current owners/members.
Do I need to use AR for a cash basis LLC in dealing with this sale?
Do I work with the LLC as if it's "selling" all its assets to the members for FMV?
What would be FMV for used equipment if neither the buyer or the seller will put a number on it? Very specialized, little resale market except when some one buys the corresponding business.
Is this phantom sale by the LLC a calculation I make to work with the joint Form 1040? And, not reported on Form 1065?
Is the final Form 1065 just reporting business as usual until the sale date? But, I need to make distributions to the members in an amount to zero out the lines on the balance sheet?
I've been trying to step through this, getting through the 1065 to have the numbers to move on to the 1040. But, I keep getting detoured with how I had to deal with an asset sale by an S-corp and losing focus on this sale by members in an LLC.