Tax basis in LLC - Spidell

Tax basis in LLC

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Message Board Tax basis in LLC

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    Taxpayer and father are limited partners in an LLC that owns real estate. real estate had mortgage of $ 2 million  and they refinance an extra $3 million so now the total mortgage is $ 5 million. They took the extra 3 million refinanced and put it into their bank accounts. Both taxpayer and dad have Qualified Non Recourse Debt basis is of $1.7 million each and an ending capital account of $ 1.1 million each. Is the $1.5 million they each put into their bank account taxable?

    Would debt basis go down?

    Would taxable capital gain be the $1.5 million deposit less $1.1 million basis ?