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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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Partners share of capital infusion We run a

Resolved Question:

Partner''s share of capital infusion:
We run a farm/wreath business, as a partnership. I had to go back to work to get some capital into the business. In the past everything was on 50/50 basis but now I am at a loss on how to enter the extra cash I am putting into the business.
My questions are
1-How do I record this added cash infusion into the Company?
2-How do I expense/deduct this on the tax returns?

Added info
We are a partnership
We are a couple that is unmarred (together for 18 years, no common law in Maine)
IRS forms we use for business.
1065 Sch K1
1040 Sch F
Personnel Forms
1040 Sch E
1040 Sch SE
Submitted: 9 years ago.
Category: Tax
Expert:  RD replied 9 years ago.

Your cash infusion will be shown as capital contribution to the company. It will not be deductible as expense on the tax returns. It will increase your basis in the partnership.

It will be reported on Sch K-1 under line item L.

and on Form 1065 Sch L(balance sheet) Line 21.


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 other Tax Specialists are ready to help you
Customer: replied 9 years ago.
Thanks for the quick response.

Am I understanding this right?
Sch K-1 under line item L.until this year it has always been 50/50 on profit, loss and capital on both k-1s
So now it would be,
50 profit, beginning and ending
50% loss, beginning and ending
50% capital beginning, 90% capital ending
Of course the other k-1 would have a 10% capital

On 1065 Sch L
We are not required to complete Schedule L, as we meet all three of the requirements.
Does this change anything?

I guess instead of “jack in maine” it should be “dumb in maine” <grin>