My aunt and uncle have several rental single family houses. They also set up an LLC and reported tax return for the rental activities of all the houses for years. Forms 4562,
8582, 1065, and 1065 schedule K-1, etc. were used and finally flew to the 1040. Last year, they sold one of the rental properties, held more than one year, with some net profit. Now, the questions are:
1) Which form (4797?) should they use to report the sales?
2) Since they still have some carryover lost, can they use the lost offset the gain?
3) If the answer for 2) is Yes, which form should use to make the calculation before flowing to the 1040?
My major concern/confusion is if report on 4797 for the sales only, it is gain. But the rest results in loss on
8582. How to combine these two results together within the LLC, then flow to the 1040 as partnerships? What is the correct way?
Thanks James.
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