The best way to understand what happened is to use an example like I set out for you, then add your facts. Once you see what went in and came out, what you should be allocated will become clear.
Paying out of a partnership (LLC) beyond the partnership agreement requires a method to do it. Your LLC uses both salary and 1099 to make specific allocations, which I assume you allow in your partner agreement. That document will drive any disputes in court, so a review, making sure it is allowed, is imperative.
If special allotments of income, expense, profits, etc. aren't allowed in your agreement, you can argue the payment is not correct (I know you agreed verbally - it just may not be allowed to verbally agree to amend your partner agreement).
The only way to make special allocations to one partner is to pay out via 1099 or salary.
Since you are in dispute, I suggest you request a complete copy of the bank records. In the alternative
, copies of your bookkeeper's workpapers will lay out your questions in more detail. Your agreement will spell out your rights to records.
Your bookkeeper has told you of the improprieties; allow her to explain to you what the income should be versus what it is. Her work will be the first records I would get to start my inquiry.
The next is your LLC agreement. Review it carefully for the calculation of income sections, rights to records, who is the Tax Matters partner (who signs the return
for the LLC).
Once you have a sense of what the issues are and can identify them in your records, you can file a Form
8082 (Report of Inconsistent Treatment or Administrative Adjustment
(link: http://www.irs.gov/pub/irs-pdf/f8082.pdf) to report only the income or loss you believe you should report. IRS will investigate and determine a resolution of the issue.
You might also consider taking protective steps about your ownership. An attorney's services may be needed, unless you can come to a settled amount for a buyout or turn-in of your ownership interest.
I know there's a lot here, but you really need to review your situation with a tax pro, and possible a litigation attorney if your dispute goes that far. The records I suggest you obtain, along with an affidavit from your bookkeeper, will be the initial steps needed by the CPA or attorney or both you consult.
Sadly, many of these disputes cost more than they ultimately would pay out, so a cost-benefit
analysis should be done in deciding how to get the most value for your investment.
I hope that gives you the 'next steps' to take in building your case and reporting
correct income for 2012. Thanks again from Just Answer/Pearl.