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A question about LLC tax return: I have a LLC that collected…

A question about LLC tax...
A question about LLC tax return:I have a LLC that collected money from a few friends to invest in a startup company. Each person contributed $100k to invest in the startup plus $2k to cover the administrative expenses of the LLC (e.g., accounting fee, franchise tax etc). On the K-1 form, for the line “Capital contributed during the year” (Section L), should it be $100k or $102k? My accountant entered $100k there and then entered $2k in Section K (in the “Recourse” line). I thought this was incorrect. Your thought?
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Answered in 17 minutes by:
3/16/2018
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,269
Experience: Adjunct Professor
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Hey! I'm Carter, I'm a CPA.
I think you're right. It should be the $102. Unless you guys expect to be paid by the $2k, then it is a contribution, not a loan.
Let me know if you need anything else. If not, please leave a rating. Thanks!
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Customer reply replied 4 months ago
Since he did the e-filing already, should he correct it and re-file? He is reluctant to change it and re-file.
It's really not too big of a deal. You should be tracking basis outside of the return anyways and it can be fixed next year.
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Customer reply replied 4 months ago
Ok. Thanks. The current way he does it, seems to treat the $2k as a loan from each LLC member to the LLC. Does that mean the LLC needs to pay each member back in the future? But the LLC won’t have any $ left since the $2k will have been used up covering the administrative expenses.
Yea that's how he's treating it. If that's not the intent then it would be the capital contribution as you pointed out.
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,269
Experience: Adjunct Professor
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