You will owe tax on the profit amount even if it is not distirbuted in 2008.

You will not owe the tax again when it is distributed in 2009.

The distribution is not reported on Form 1099. But, it is reported on Sch K-1.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Generally with a LLC - the income is reported in the year the income is earned and not in the year the income is distributed.

Therefore- it does not matter when the income was distributed and so you do not have to amend the 2008 tax return when the amount is distributed.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.