Sale of property within LLC

[Norman Scott Duncan]

Three family members have owned a house for 10 years - always occupied by a family member. This year we placed it in a LLC (Limited Liability Company) in order to rent it for about 3 months of the year. Now we have decided to sell it. The question is: since there will be significant capital gains, will these gains flow to our individual returns? Or does the LLC have to pay the capital gains and the remainder flows to us. There is nothing else in the LLC except this house. Any info will be appreciated.

[Naseer Khan]

@Norman Scott Duncan Generally, an LLC is treated as a Partnership by the IRS for tax purposes. This means that the income and tax consequences will flow directly to the members of the LLC in proportion to the their respective LLC membership interest. The LLC itself will not pay taxes on the gain from the sale of the property. This will require partnership accounting on your end (K-1 statements).