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geedubya55, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 358
Experience:  17 years experience in business and individual taxation specializing in small business and farming
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I had a 25% interest in a LLC and recently received an additional

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I had a 25% interest in a LLC and recently received an additional 15% of the company. I had to pay an additional $30,000 that is being collected through distributions. I pay 15% of each distribution toward the loan. Is this tax deductible and if so were and how is it deducted?
Submitted: 5 years ago.
Category: Tax
Expert:  geedubya55 replied 5 years ago.

Thank you for using Just Answer.


The amount paid for your additional share of the company is not currently deductible. However, it adds to your basis in the LLC, so if you dispose of your share of the company, it will reduce the amount of gain recognized on the disposal. If part of each payment represents interest on the loan, the interest is deductible on schedule A of your personal return as "Investment Interest". But the principal portion of the payment is just a payment on the $30,000 purchase price.


So, the answer to your question is: you will be able to deduct the $30,000 eventually when you sell your interest in the company. In the mean time, make sure you keep track of your basis in the LLC so you will get that deduction.

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