Discussion:K1s for LLCs?
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Discussion Forum Index --> Tax Questions --> K1s for LLCs?
| 4 August 2008 | |
| I have a client with an LLC. In June of 2007 he acquired a partner -- another LLC -- that bought in with $80,000. Doesn't the first LLC, at the end of the year, issue a K1 to the second LLC? The 2nd LLC wants the K1 to go to an individual. The K1 goes to the LLC or to the individual?
Thanks. | |
| 4 August 2008 | |
| It goes to the LLC member. The other LLC or an Individual. From whom did the $80,000 come from? | |
| 4 August 2008 | |
| DZCPA;
Thank you for your help, the $80,000 came from the other LLC. So then I need to issue the K1 to the second LLC. Correct? | |
Michaelstar (talk|edits) said: | 5 August 2008 |
| Do you have any type of written agreement on tha sale of this LLC interest with the other LLC? Is the other LLC treating the $80k as a deemed distribution on their books / K-1 to the individual member or is that LLC treating the purchased interest as an asset on their books? The answers to those questions may help provide your answer. | |
| 5 August 2008 | |
| Michaelstar,
Thanks. No, I don't have much information about their dealings. I suspect they don't either ;) (the first LLC is a little flakey) and I'm not sure they even have a partnership agreement that lays out the intended treatment of the K1s. The 1st LLC's tax return (1065) was done with 3 K1's -- the third K1 was given to the "buy-in" LLC (the "2nd LLC"; showing a loss of $60,221) -- as a limited partner with a 45% interest in the first LLC; partner's ending capital account = ($9,602). Thank you for your prompt answer. | |
Michaelstar (talk|edits) said: | 6 August 2008 |
| You could always ask for authorization to call the preparer of the other LLC return and ask them these questions. The $80k check might have some notation on it as well so that might be a place to look.
DZ's answers may very well be correct in the end. I would ask a couple more questions before I completed the return in order to possibly prevent unhappy members who force issues later on down the road causing you the need to amend any returns. | |
| 6 August 2008 | |
| Michaelstar,
Thanks. Yes, both LLC's are already leaving messages. | |
