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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I am creating financial statements for LLC A. LLC A is a partner

Customer Question

I am creating financial statements for LLC A. LLC A is a partner in LLC B and has received a k-1 for its share of income/loss. How does that income from the K-1 get reported on LLC A's financial statements?
Submitted: 6 years ago.
Category: Tax
Expert:  RD replied 6 years ago.
The character on income remains the same. So if LLC B reported ordinary income than you will report these as ordinary income on LLC A ( You can state as Pass thru K-1 Income on LLC A;s tax return). If it is capital gain than it has to be reported as capital gain.

The investment increases or decreases as provided in the K-1 and the net shows on the Balance Sheet as Investment.

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.

Customer: replied 6 years ago.
In regards XXXXX XXXXX monthly journal entry to report the income, is the total on the K-1 just amortized evenly over 12 months? Also, there is qualified non-recourse financing reported on the k-1, is that also recorded as a liability? If so, how?
Expert:  RD replied 6 years ago.

I would suggest you record the income on an annual basis. Qualified non recourse financing is not recorded as liability on LLC A. It is just an information that you would report on the LLC A's tax return (on 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.

RD and 3 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
If the net change in the investment on the K-1 is a decrease in excess of the original investment, after the original investment on the f/s is relieved, how is the excess treated? Further, if a partner contributed stock upon admission into the partnership, the change in FMV must be recorded on the f/s at year end, correct?