Business tax return question
I’m not sure if anyone here would know this. But here goes…
On the k-1 for a partnership, on line 19a for distributions of cash and marketable securities is this total figure counted as income to the partner? Are we also looking at guaranteed payments a part of their income as well?
Thanks
Permalink Submitted by mk foss on Tue, 2009-04-14 06:41
Guaranteed payments are income on Schedule K-1. Distributions are not – any income associated with them would be shown on another line on the K-1; ignore the distributions unless they are so large that the capital account balance goes negative.
Permalink Submitted by Linda Randazzo on Tue, 2009-04-14 20:00
Thank you,
What other line on the k-1 would we look at for income possibly associated with distributions? What are the distributions usually taken for?
Permalink Submitted by mk foss on Wed, 2009-04-15 06:20
If there is income associated with distributions, it would be included in the income lines on the K-1. You could have taxable income if the distributions make the capital account go negative.
Distributions are made because they are part of the agreement or because people who report income on their personal returns want cash to pay the tax.
Permalink Submitted by Linda Randazzo on Wed, 2009-04-15 15:43
Thank you
Permalink Submitted by Linda Randazzo on Fri, 2009-04-17 15:10
One more question if you don’t mind,
Does the capital account on each k-1 represent the individual partner’s investment of capital into the business? Sorry, two questions, right above where M is on K-1, next to recourse is this the net worth of the business?
Thanks