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My partner says i owe him 24000 in a capital account on

Customer Question
My partner says i...

My partner says i owe him 24000 in a capital account on healthcare. He always knew my healthcare would be higher and said well its all family. now he wants the difference

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

An llc. 10 years. now i have five on my healthcare. He has two. we discussed costs and it was said dontworry about it. now, because someone told him there could be money there he said he wants to start being paid down

Accountant's Assistant: Is there anything else important you think the Accountant should know?

First of all, we agreed that healthcare costs are skies the limit and for me not to worry. i need to know if the capitol account HAS to be paid or can be fforgiven

Submitted: 8 months ago.Category: Tax
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Answered in 6 minutes by:
11/29/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,865
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice 1986.

...

Here is how it should be handled:

...

The actual deduction occurs at the partnership level and is passed to the partner via lower income on the K-1.

If the partnership pays for the health insurance premiums for its partners, it deducts the expense as guaranteed payments and reports the amount to each partner on their respective K-1s as guaranteed payments.

...

The partner then picks up the guaranteed payment as income and reports “self employed health insurance” deduction. The guaranteed payment offsets the self employed health insurance deduction for a net zero effect on taxable income, thus the single deduction described above on the K-1.

...

When a partner pays his (her) own medical insurance premiums, the self-employed medical insurance deduction is allowed if there is self-employment income.

...

In terms of your question " i need to know if the capitol account HAS to be paid or can be forgiven"

...

Partners can agree to ANYTHING as long as it's legal. AND contracts can be verbal a writing is not required here.

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Customer reply replied 8 months ago
if we had a verbal understanding not to worry about the difference, then if decided to forgive the negative balance can be done? can anything be considered in a capital account such as bonus that was not equal or flights paid for their spouse who is our book keeper
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Essentially anything can be done AS LONG AS there's agreement between partners. In the absence of an agreement (verbal or written) then a court (that's what we're talking about here, what would happen if on party will not agree) will go to partnership law for your state.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" – That’s the only way I’ll be credited for the work.

I hope you’ll rate me based on my accuracy and thoroughness (as opposed to any good news/bad news content). Thank you!

...

But again, if you need more on this, please let me know.

Lane

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