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Thank you for your question regarding QuickBooks
First, what type of entities are Company A and Company B? I'm guessing B is an S-Corp, but what is A?
Both A and B are LLC. A is taxed as S-corp (form 1120S), B is taxed as partnership (form 1065)
In this case, for tax purposes, income in B is passed-through A to you, if you are A's 100% owner
Nothing gets added to A. The distribution goes to you personally.
Your inside basis in B is increased by the $50 not distributed. Your outside basis does not change.
No, A is only 90% owner.
A is a 90% owner of B, then the full amount of the K-1 for A gets passed to the owner of A, assuming A is 100% owned by you.
Assuming A is in its own company file in QB and not mixed in with anything else, then:
record the $100 as Other Income on the books of A. It is non-operating income.
It is reported on A's K-1 to you as the shareholder.
Just to make sure this is not a typo: B reports $150 on its K-1 to A. $100 is the actual distributions that B made to A throughout the year. Does A report $100 or $150 on its K-1 to me?
Yes, A is in its own company file in QB and is not mixed with anything else
Well, we do want to get technical here.
So, $150 is the INCOME, and it all passes through to the shareholder.
Therefore the income is 150 in Other Income. However, only $100 goes to cash account if actually received; the rest goes to your equity in B.
Yes, that's better accounting.
On your personal return, you will effectively recognize the full $150 income even though the cash might stay in the corporation
So how do I book the $100 actually received? Goes to cash account, ok, but what category do I assign to it?
Thanks. Last question: what type of account should be Equity in Investment B?