Capital Gains Tax on Flip via Joint Venture

[Rafael Norat]

I have a flip project with 2 partners through a joint venture. The property was purchase in an llc I own with a separate agreement stating our purpose, roles, and such. Question: would the capital gains tax be calculated individually after the profits are disbursed, or do I have to process that prior to disbursement and subtract out the estimated tab amount? I'm reaching out to my CPA on this matter but figured I'd shoot it out here as well.

[Ryland Taniguchi]

Originally posted by @Rafael Norat:

I have a flip project with 2 partners through a joint venture. The property was purchase in an llc I own with a separate agreement stating our purpose, roles, and such.

Question: would the capital gains tax be calculated individually after the profits are disbursed, or do I have to process that prior to disbursement and subtract out the estimated tab amount?

I'm reaching out to my CPA on this matter but figured I'd shoot it out here as well.

 Talk to the CPA about s-corp options but only if you exclusively plan to flip. An s-corp is not a good place to hold rentals.

Another thing to look out for is if one of the partners is a licensed and bonded contractor and you are hoping to avoid sales tax and B&O tax. Even if one of the partners is a licensed and bonded contractor, you still may have to pay sales tax and B&O (you do in my state). There is a complicated way around this that involves changing the distribution schedule so the contractor total comes out as a draw.