Dusty2
Level 7
06-29-2022
12:16 PM
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You are double deducting the $400,000. They sold the land for $1,000,000 with a basis of $400,000 making the profit of $600,000. Since you said they fully distributed the money the basis is 0 ($400,000 was return of capital) so the full $600,000 is taxable.
Dusty