LLCs and any pass through entities give you an additional 180 day after the LLCs taxable year end. If an LLC does not reinvest in 2019, you still until June 28, 2020. (Assume I counted 180 days correctly.)
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What happens if my LLC is not able to dispose my capital asset to make a cash investment in a QOF within 180 days?
Is there any flexibility on the 180-day rule?
Answers
"Reverse" investments are not available for QOFs, as they are for 1031 exchanges. You must always sell first and invest later. The best workaround you can come up with is if you set up convertible debt for a private fund. The obstacle is getting the private fund to accept convertible debt in lieu of a capital contribution for equity.
You have flexibility in that, if the LLC does not invest the gain within 180 days of the sale, you generally can invest your share of the gain within 180 days starting on Dec. 31. However, you should make sure you know the applicable 180-day window.
If your gain is from a capital gain incurred inside of a partnership, the 180-day period starts on either the date of the transaction or the last date of the partnerships taxable year. Additionally, the 180-day period for Section 1231 gains always starts on the last day of the taxable year.
The exception will be gains flowing through to partners in a partnership. The 180 days start on the last day of the entity’s tax year if the entity elects no to defer the gain. Similar treatment for net 1231 gains.
No flexibility, unfortunately. You should check on the 180-day period. In many cases it will commence on Dec. 31.
No. If the party/seller is a pass-through or the gain is a 1231 gain being rolled. The 180 starts to run as of the last day of the year.
I am not aware of any flexibility on the 180 days. If you miss the deadline then you will owe the tax on the gain.
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