Multi member LLC to single member LLC

[cjoh]

Hi,

One LLC member buys the other two LLC members' interests.  This causes the LLC (taxed as a  partnership) to terminate.

On the final 1065, are the assets distributed to all partners and then the purchase takes place.  I.e. the purchase is not reflected on the partnership return?  That seems to be what Revenue Ruling 99-6 states.

Or, is the LLC member considered to contribute the cash for the purchase.  Then, that cash gets distributed to the selling partners and the rest of the assets are distributed to the buying partner?

Thank you.

[PhoebeRoberts · Accepted solution]

Rev Rul 99-6 is the way I've always handled it.

[cjoh]

Thank you.

[cjoh]

Follow up question.  

Can partnership take bonus depreciation on an asset bought in same year that the asset is distributed when the partnership terminates?

I understand there will be recapture but i think the savings could be the self-employment tax.

Thank you.