ADK, LLC sold the stock of one of its subsidiaries that it had owned for several years, and is required to distribute the net proceeds to its members per the LLC agreement terms. Assume the stock was sold at a gain (i.e. FMV > basis), and the gain is capital in nature. Net proceeds are calculated as follows: Gross proceeds - Taxes owed on the gain = Net proceeds.
How does the gain from the sale impact the amount of tax that ADK, LLC will compute on its partnership tax return (Form 1065) and subsequently remit to the IRS?
Assume the newest member of ADK, LLC joined only 9 months ago. Does this impact how ADK, LLC reports the capital gain (i.e. short-term vs. long-term) on the Schedule K-1 for this member?
How will the unitholders be taxed on their share of the net proceeds they receive as a distribution?
What if the restructuring never happened, and it was actually ADK, Inc. that sold the subsidiary's stock at a gain and distributed the net proceeds to its shareholders? How might this change in facts materially impact the shareholders (if at all)?