Have a Tax Question? Ask a Tax Expert
Hi from just answer. I'mCustomer I'll assist.
I'm not sure if you represent the partnership or the owner of the partner interest. I'll look at both sides.
The partnership can set up contra equity accounts called distributions-Smith for Smith's check. Debit distributions, credit cash when the check is issued.
If you are the investor, you credit your investment account and debit cash when you get a check.
Note that neither side recognized income or loss when the payment is issued.
Thanks for asking at just answer. Positive feedback is appreciated. I'mCustomer
When you bought it for 1000:
Debit to investment. 1000
Credit cash 1000
When you get a distribution of $350:
Debit cash. 350
Credit investment. 350
When your k-1 comes in, stating you earned 500 income:
Debit investment. 500
Credit interest, rent, other income. 500
At year end, your basis in the investment is correct at 1150, and you recorded the 500 income.