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1065 Partnership Investment

dr58lj15
Level 2

I use Proseries Plus.   I am preparing a 1065 partnership for the partnership's first filing.   They had $165K of investment income.   This was cash out of pocket not a loan.   They do include this correct?   If so, where should it be entered in the software for the 1065 Partnership.   So, simply my two questions are:

Do I include the $165K cash investment

If so, where is it entered in the software.

 

Thanks for any advice.

Lynnetta

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1 Best Answer

Accepted Solutions
qbteachmt
Level 15

You seem to be confusing Cash Flow, with any and or all the reasons cash might be flowing.

You used the word "cost" but can you think of what got purchased?

You used the word "asset" and that would be something of value that is going to last a while, and is still on hand.

Example: money spent on stamps and printer paper are office expense; they get all used up. But money paid to buy a drill press, means that is invested in a piece of equipment that has a useful life and doesn't not get all used up by just making one hole.

You used the phrase "fixed asset" but you need to learn about asset types, asset classes, useful life, and which tax rules apply to which assets.

Money is an asset. If you put money into your entity's bank account, there is no Cost, nothing got Spent, not an expense, and nothing got bought. The money didn't drip away while being moved. It is not all used up. It is on hand. It is an asset. The next point to determine is:

where did the money come from?

Loan (which makes it a liability to be repaid) or part of the owner(s) investment into their own entity (which is their Equity or ownership position).

And they fact that you treated all of those words (and then some others) as if they are interchangeable is what has everyone worried. You will not be fair to your clients, if you continue to do this without a mentor, some training, etc.

*******************************
Don't yell at us; we're volunteers

View solution in original post

5 Comments 5
sjrcpa
Level 15

Cash investment = capital contribution. It is not income.

The more I know, the more I don't know.
dr58lj15
Level 2

I understand not income, but would you set it up as a Fixed Asset as start up cost?

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IRonMaN
Level 15

Have you previously prepared partnership returns?


Slava Ukraini!
sjrcpa
Level 15

No. It's an equity account. It appears you are way out of your element here.

The more I know, the more I don't know.
qbteachmt
Level 15

You seem to be confusing Cash Flow, with any and or all the reasons cash might be flowing.

You used the word "cost" but can you think of what got purchased?

You used the word "asset" and that would be something of value that is going to last a while, and is still on hand.

Example: money spent on stamps and printer paper are office expense; they get all used up. But money paid to buy a drill press, means that is invested in a piece of equipment that has a useful life and doesn't not get all used up by just making one hole.

You used the phrase "fixed asset" but you need to learn about asset types, asset classes, useful life, and which tax rules apply to which assets.

Money is an asset. If you put money into your entity's bank account, there is no Cost, nothing got Spent, not an expense, and nothing got bought. The money didn't drip away while being moved. It is not all used up. It is on hand. It is an asset. The next point to determine is:

where did the money come from?

Loan (which makes it a liability to be repaid) or part of the owner(s) investment into their own entity (which is their Equity or ownership position).

And they fact that you treated all of those words (and then some others) as if they are interchangeable is what has everyone worried. You will not be fair to your clients, if you continue to do this without a mentor, some training, etc.

*******************************
Don't yell at us; we're volunteers