Today TaxMama hears from Rob in Florida. He tells, “I sold my majority interest in an LLC (filing as a partnership with pass-through income) to another partner for $10.00 on August 11, 2008. The partnership’s CPA sent me a 1099-MISC with an amount entered into nonemployee compensation. I was expecting a K-1. Is the 1099 a mistake, or is that the correct document?”
That’s a good question.
It doesn’t seem as if it makes sense to me. Please, give the CPA a call and ask him or her to clarify.
As far as I know, you should get a final K-1. It should show last year’s equity as your beginning
capital balance – and ZERO as your ending balance.
You should also get a letter, or statement with the K-1 with a computation of your ‘inside’ gain or loss on the shares in the LLC.
But that’s just what I would do. Perhaps the CPA has a reason for doing what s/he did?
And remember, you can find answers to all kinds of questions about liquidating a partnership interest and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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- IRS Publication 541 :: Partnerships