We started the LLC 10 years ago and Purchased the 2 properties at the same time for $160K the contract is for $350K and Im looking to pay around 50K in Capital gains taxes federally and to the state of CA.  

Capital gains on property would be large - could defer with 1031 exchange in the future2.

It's the most valuable part of the process and requires the least money and risk.

But check out below what he said to me in regards to this: "First, there are depreciation issues among many other possible factors on the tax return which would be calculated into the K-1 numbers, along with the fact that there would be capital gain/loss rather than ordinary income.

First things first - 50 K is good money to do lot of things , These "things" might not be just exactly buying a house , but you should try to know what is the best use for that 50k which will give you a reasonable return /break even / slight loss - but the most important thing is , After that project you should gain some practical knowledge abt investing in US Another important thing that I learnt - never take anything that anyone say here as an absolute thing. we all have our blind spots and biases .

Then after the 365 he could bar right of redemption to gain sole ownership?

I therefore hope to give back as much as possible to fellow members as I continue to gain experience in the world of REI.Thanks for reading, and happy Tuesday!

The whole purpose here is to not pay any capital gains taxes.

You've learned a valuable lesson, trust but, verify.

It does cash flow nicely but more so it will quickly gain equity as property values are quickly elevating in the area.