Where do I enter "partner cash distributions"?

Forum|Forum|6 years ago
June 5, 2019
2 replies
0 views

I paid out cash to run the business. Now I need to enter the cash that I put into the partnership. Where do I enter this to reconcile the balance sheet?

TurboTax Business Windows

Best answer by JulieCo

You enter partner cash contributions and distributions in the Partner Information section of TurboTax.

To be brought to this section, select the Business Info tab at the top left of the screen. Then select Partner/Member Information, and then select to EDIT the partner who made the contributions or received the distributions. Continue through several screens until you come to one labeled Partner/Member Capital where you can enter the contributions made by the partner or distributions given to the partner. See the sample screenshot attached.

JulieCoAnswer

Employee

You enter partner cash contributions and distributions in the Partner Information section of TurboTax.

dougp2901

Are partner cash contributions entered only for the fiscal year - or totals for the life of the partnership? - thx

Mike9241

if you're asking for Turbotax Business to prepare th 1065/K-1's it's only for that year. if you're asking about a 1040, they don't need to be entered at all because Tutbotax doesn't use them for anything. It is your responsibility as a partner/member to personally keep track of your tax basis.

JackM2

We have a family LLC. My wife and I each transferred $15,000 at year end to each of the other four members. We did not contribute new money to the LLC, rather we transferred a portion of our ownership interests in the LLC to each of the other four. How do we reflect in TurboTax our gifts (totaling $120,000) to each of the other four, whose capital accounts will be increased by $30,000 each?

Mike9241

this can be a lot more complicated than you think especially if the LLC has debt.

Transfers among family members identified as gifts may trigger sale or exchange treatment for the donor to the extent a decrease in the donor’s share of partnership liabilities is treated as a deemed cash distribution. Rev. Rul. 84-53 illustrates basis allocations and adjustments that may occur when a partner owns an interest in a partnership and disposes of only a portion of such interests.

Gift of a Partnership Interest

IRC section 704(e)(2) addresses the allocation of distributive share where the partnership interest is created by gift. The gift of a partnership interest may have a tax impact on the donor. The following factors should be considered when determining whether an issue is present:

Whether the partnership interest transferred was properly valued;
Whether the adjusted basis of the partnership interest was correctly stated;
Whether allocation of the distributive share of partnership items between the donor and donee was correctly computed;
Whether the transfer resulted in debt relief to the donor;
Whether debt relief results in a deemed sale of a partnership interest;
Whether the allowance of suspended passive activity losses was correctly computed;
Whether there is a gift tax return requirement and a gift tax liability

The gift of a partnership interest free of liabilities (that is, has no share of partnership liabilities under IRC section 752) is not subject to income tax. If the partnership interest is encumbered by debt, or the donor partner shares in partnership liabilities pursuant to IRC section 752, there is potentially a taxable event.

Gift of a Partnership Interest Unencumbered by Debt

The basis of the gift of a partnership interest in the hands of the donee when the partnership interest is not encumbered by debt is generally determined as follows:

For purposes of determining future gain, the donee’s takes a carryover adjusted basis from the donor.
For the purpose of determining future loss, the donee’s takes a carryover adjusted basis from the donor, except that if the donor’s adjusted basis was greater than the fair market value of the property at the time of the gift, the basis to the donee is limited to the fair market value at the time of the gift.

Effect on Passive Losses

The gift of a partnership interest with accumulated suspended passive activity losses will not trigger an allowance of the losses to the donor or donee. See IRC section 469(j)(6)( b ). The suspended passive activity losses are instead added to the donor’s adjusted basis in his/her partnership interest immediately before the transfer. This step up in basis carries over to the donee under the general rules of IRC section 1015. See IRC section 469(j)(6)(A). The step-up is to the donor’s outside basis in the partnership under IRC section 705, rather than the partnership’s inside basis in its assets. Any tax benefits to the donee are deferred until such time as the partnership interest is disposed of in a taxable transaction.

Moreover, the step-up in the donor’s outside basis has limits. If the addition to the donee’s basis resulting from unused passive losses exceeds the fair market value of the partnership interest at the time of the gift, and the donee subsequently disposes of the interest in a taxable transaction resulting in a loss, the donee’s basis is limited to the fair market value at the time of the gift.