Question
selling an LLC interest - effect on K-1
The original two members of an LLC that files as a partnership sold their total interest to a different LLC that also files as a partnership. The sale took place in July 2020.
The partnership will report using the interim closing method, whereby the two original partner's activity through the July closing date will be reported on the K-1, which will be marked as final.
The question is - are their capital accounts closed out to zero on their final K-1s, or do their capital accounts reflect their ending balances (prior to their leaving the partnership), for purposes of calculating their gain (or loss) on sale on their individual returns.
Thanks in advance!
