All Forum Posts by: Kelly Douglas

Thanks Wheatie!

Your response makes total sense.

One other thing. As an LLC, are we required to distribute all net profits to members or can we leave a small portion in the kitty for future investments? If so, how will this portion be taxed? Will the tax obligation still filter to the members?

Thanks again!

Thank you Loki005!

The numbers were already changed around quite a bit. Thank you though!

We formed an LLC around 2004 to purchase vacant land for development. We have been in contract for the last year and half with an option. We have not closed on the property, so the title hasn't transferred yet. We have been negotiating with the village and have had some success gaining interest with our concept plan. In the mean time, a large developer has approached us to purchase the land. It is a significant offer that has our team interested in closing on our option and then selling to the developer.

As a member of the LLC, I'm exploring my tax obligation, if we proceed with this plan.

Our team has discussed the short term capital gain dilema we face and all agree that the offer is certainly something to consider, regardless of the tax burden.

What short term capital gains tax rate should I apply to my figures....My "current" tax bracket? Or will I be hit with the 33% or 35% rate? The capital gains are substantial enough to place me in this area.

Any help our suggestions would be greatly appreciated!

First off, I know I should contact my CPA, but I'm trying educate myself on this matter so I can ask the right questions.

I will try to keep it simple.
"My share" of the deal is as follows:
I have a $1,000,000 Option to purchase 10 acres of vacant land.

I just received an offer to sell this option to a developer. With this offer, I will Net $1.7 million after closing cost, attorney fees, commission, etc.

I know it will be a Short Term Capital Gain. The question is, will I be classified in my current tax bracket or the one this deal will place me in?

In this situation, is there another way to reinvest or limit my tax obligation?

Thank you for your help.