1065 partnership tax basis

[wilsonxb]

I have a client that was an llc since 2017. in 2020, the client became a partnership. I would like an excel spreadsheet that will allow me to enter the basis for the client since 2017 and help me determine the inside and outside basis for the client. I am willing to pay for the excel spreadsheet that will make it easier for our team to determine the basis. Here is an example:

2017 Net income 120,000 Single member LLC

2018 Net income 130,000  Single member LLC

2019 Net income 140,000  Single member LLC

2020 Net Income 180,000  2 member partnership LLC  1065

The client is selling the business at the end of the year for 600,000.00

I would like to know:  Does he have a gain?

Do we count the 120,000 + 130,000 + 140,000 + 180,000 = $570,000

Assume he had 50,000 distribution in 2020

If he sells the business for 500,000, will he have a gain of 20,000

Will the net income from 2016 thru 2019 be part of his basis?

Please let me know if I am correct or not.

A

[qbteachmt]

I'm not sure there is enough info here. For one thing, you listed this under ProSeries. Which tax return are you preparing? Year, Form, Whose.

You describe "became a partnership" as if this is a caterpillar pupated into a butterfly. However, didn't you have a SMLLC disregarded Sched C filer, and now they formed a partnership with someone, filed paperwork, submitted for an FEIN? And how did the other partner become a partner: paid something to the other person?

"Assume he had 50,000 distribution in 2020"

Draw or guaranteed payment? From the SMLLC or from the new entity? Was 2019 the final year he operated as SMLLC?

"If he sells the business for 500,000, will he have a gain of 20,000"

Is this as additional hypothetical scenario, or is this part of how that other partner came to exist that created this new entity as Partnership to file 1065 instead of Sched C?

"I am willing to pay for the excel spreadsheet"

Okay, but this is not a Job Board, either. Inside and Outside basis would be easier to determine with the missing details, as a place to start.