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Old 01-10-2015, 10:31 PM
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Final 1065 and k-1 presentation

I was asked to help wind down a partnership. There are three partners, two of the three partners were paid cash as a distribution to get their capital accounts to zero.

The issue is the partnership has $100 cash remaining yet one partner has a remaining capital balance of $15,000. I am concerned with the following presentation:

1) The $100 would be a distribution to the partner with the capital balance and would be reflected on page 5, m-2 section, line 6a and on K-1 page 4 Line 19a and would flow to page 1 of the k-1

2) My question is the remaining capital, would the 14,900 be a return of capital and recorded on page 5, m-2 section line7?

3) Where would the 14,900 be reported on his k-1?

Thanks in advance,



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Old 01-11-2015, 09:16 AM
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Quote:
Originally Posted by overtaxed View Post
I was asked to help wind down a partnership. There are three partners, two of the three partners were paid cash as a distribution to get their capital accounts to zero.

The issue is the partnership has $100 cash remaining yet one partner has a remaining capital balance of $15,000. I am concerned with the following presentation:

1) The $100 would be a distribution to the partner with the capital balance and would be reflected on page 5, m-2 section, line 6a and on K-1 page 4 Line 19a and would flow to page 1 of the k-1

2) My question is the remaining capital, would the 14,900 be a return of capital and recorded on page 5, m-2 section line7?

3) Where would the 14,900 be reported on his k-1?

Thanks in advance,
1) The $100 would be a distribution to the partner with the capital balance and would be reflected on page 5, m-2 section, line 6a and on K-1 page 4 Line 19a and would flow to page 1 of the k-1======= correct; 1065 K1 - line 19
a partner’s capital account can be periodically drawn against or distributed from so the individual partner can access cash from his/her investment.the amt is reported on Sch K-1of 1065 but it does not constitute taxable income. partners are taxed on the partnership income regardless how much, if any, is distributed to them in cash.however, the partner is not taxed on distributions as long as they are not beyond the partner’s basis even though it shows up on the sch K-1. The only item that is taxable to you from your K-1 is the ordinary income on line 1 and any interest income the partnership got. Capital Gains from the partnership too.

2) My question is the remaining capital, would the 14,900 be a return of capital and recorded on page 5, m-2 section line7?========correct;


3) Where would the 14,900 be reported on his k-1?===== Each member of an LLC has a capital account which is shown in the balance sheet as an equity account. The member's capital account records the initial contribution and any additional contributions made



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