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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4515
Experience:  35 years tax experience, including four years at a Big 4 firm.
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How can I report the K1 money given to the owner of a

Customer Question

How can I report the K1 money given to the owner of a business on to the books? I use quick books for accounting.
Submitted: 9 months ago.
Category: Tax
Expert:  PDtax replied 9 months ago.

Hi from just answer. I'mCustomer I'll assist.

Expert:  PDtax replied 9 months ago.

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

Customer: replied 9 months ago.
I am the owner of a business and at the end of the year, I report the profit on K1 and issue myself and that amount I report on to my personal income tax. So when I report it on my personal taxes how should it be shown on my quick books?
Expert:  PDtax replied 9 months ago.

When you bought it for 1000:

Debit to investment. 1000

Credit cash 1000

Expert:  PDtax replied 9 months ago.

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.