Discussion:1065 Guaranteed Payments
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Discussion Forum Index --> Advanced Tax Questions --> 1065 Guaranteed Payments
Discussion Forum Index --> Tax Questions --> 1065 Guaranteed Payments
| 27 March 2008 | |
| I have a client partnership who built and will sell a cabin. One partner (individual) is also the General Contractor working under a Single Member LLC. Partner is Individual but I'd like to report Guaranteed Payments on his K-1 for services he rendered even though he is was operating as a Single Member LLC for GC work. We would like to do this because the turkey embezzled about $50K from the partnership. A little vindictive but it helps. | |
RoyDaleOne (talk|edits) said: | 27 March 2008 |
| 1099 the theft loss to the individual.
Are you looking at a Sec 165 loss deduction for the $50K. | |
| 27 March 2008 | |
| The partnership doesn't want to go after him. There are 3 partners. The turkey is the son of the 2nd partner. Unfortunately, I'm the 3rd partner and I do the tax returns. | |
| 27 March 2008 | |
| We will do a Sec 165 loss when we sell the house. Can't show deductions or income until house is sold. Right now embezzled funds are reported as current assets (Current Receivable) | |
| 27 March 2008 | |
| Far be it from me to throw water on any plan under the name "LLC". But, naive as I am, I thought "guaranteed payment" meant something. Like, don't the partners agree as to what the GP is? Or, does the accountant decide that? Hmmmm... I have a lot to learn. | |
| 27 March 2008 | |
| Forgot to add. 1099-C instructions state that it should be written by businesses who are in the business of lending money (paraphrased). So I wouldn't necessarily write a 1099-C. I supposed I can do a 1099-MISC as other income but I don't think that would 100% accuracy. Well for that matter neither would be showing guaranteed payments on K-1. I may just do the 1099MISC, if I need to correct it later I can. Thanks for the replies. | |
| 27 March 2008 | |
| 1099 subcontractor? he would have to report as income s/t se tx. | |
Harry Boscoe (talk|edits) said: | 15 September 2008 |
| When you put it on his K-1 as a guaranteed payment, you pretty much, effectively, give up any claim to recover it from him. Is that what the other partners want, too, or are you the mover on this? Also, the partnership will get the deduction when the cabin is sold; is the gain/loss on the sale of the cabin ordinary income or LTCL to the partnership?
That it's also going to be SE income to the contractor is a nice touch... Yes, vindictive, but this one is so much easier than many I've seen! | |
| 16 September 2008 | |
| Are you certain that the theft was by the gc? How did he get to the books? Or was something else stolen?
For the GC, I have no problem giving a 1099misc. If he is the theif, add the amount of the theft to the total on the 1099misc. A 1099 C is for the canellation of debt. | |
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