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R
robin-tylim
Level 2
December 7, 2019
Solved

Partner return or 1040?

  • December 7, 2019
  • 4 replies
  • 30 views

Should my client who is a single member LLC, (but has an investor who's loan is repaid when the business is sold for a portion of the sales proceeds)  file a 1040 or a Partnership return? Can the investor who gets zero share of profits and losses until sale have a basis on the K1s?

This topic has been closed for replies.
Best answer by sjrcpa

Is "investor"'s money a loan or a capital contribution?

4 replies

sjrcpa
sjrcpaAnswer
Level 15
December 7, 2019

Is "investor"'s money a loan or a capital contribution?

The more I know the more I don’t know.
R
robin-tylimAuthor
Level 2
December 7, 2019
The client is stating it's a loan but when the business gets sold it gets repaid for a higher amount.  I'm not sure what is needed to document that it's a loan versus capital contribution
T
TaxMonkey
Level 7
December 7, 2019

And what happens if the business is not sold for a profit, and or if the loan is not repaid?

abctax55
abctax55
Level 15
December 7, 2019

If this IS a partnership, then have the client provide a copy of the partnership agreement. Which, *should* document the capital contributions.

*The client says* isn't really good enough documentation for your file....

HumanKind... Be Both
IRonMaN
IRonMaN
Level 15
December 7, 2019
Well it is good enough for me if his name is Simon :grimacing::grimacing:
Slava Ukraini!
Accountant-Man
Accountant-Man
Level 13
December 7, 2019

Is there interest stated on the loan? Is the repayment at sale the loan plus interest?

** I'm still a champion... of the world! Even without The Lounge.
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