Your tax software should have a worksheet on which to enter K-1 numbers, including this loss.

@Brad Kanouse Using Traditional IRA funds for an investment property typically incurs income tax and a 10% penalty if you’re under 59½, as investment properties don’t qualify for tax exemptions.

For tax purposes, it's considered a reimbursement for property damage.

If the LLC is a single member, it is filed on your personal tax return.

I'm also a realtor. with the real estate professional tax status.

I don't have my CPA, and I want nothing to do with tax prep.

Any advice on what setup is easiest and most tax advantaged?

Not a CPA or tax attorney but my understanding is the commission is income, taxed accordingly and deductions from the purchase are handled regardless of if the agent also generated income from that deal (if there are any deductions at all).

Partner B will get $220,000 + the single wide, while Partner A's heirs will get the apartment building and the double wide.They intend to sell one property ( the double wide mobile home ) and use the proceeds to either pay down the loan or reinvest in another rental property (possibly in another market).To defer capital gains tax, they plan to use a 1031 exchange for reinvestment.Goals & Challenges:Tax Efficiency – Structure the transfers and payments to minimize tax liabilities for Partner A’s Spouse and the Children.Guaranteed Income for Partner A’s Spouse – Ensure a fixed monthly payment of $1,100/month while transferring ownership to the Children.Long-Term Investment for the Children – Build a solid rental portfolio to support future financial growth.Operating the LLC Under New Ownership – Ensure a smooth transition, including removing Partner A’s Spouse and Partner B from the LLC structure.Proposed Plan & Questions for Advice:Instead of outright gifting the 50% interest, the LLC will be restructured so that Partner A’s Spouse retains a Preferred Equity Stake that provides them $1,100/month in priority payments but gradually transfers ownership to the Children.Payments will only be made when rental income is sufficient (i.e., when rent increases to $850/unit).Partner A’s Spouse is willing to forgo payments in bad financial times but wants assurance that they won’t face any tax consequences on unpaid amounts.If Partner A’s Spouse passes away before full ownership transfer, the Children inherit the shares at a stepped-up basis (avoiding capital gains tax).Questions:How should the LLC Operating Agreement be structured to allow withholding payments when necessary without triggering tax or legal issues?

I would like to get in touch with lenders in the SC market for purchasing and refi transaction.Contact me for details.ThanksIf you're not already familiar, look into property taxes closely for SC investment properties.