How to classify income received by partnership that is distributed to affiliated LLC's ?

Forum|Forum|7 years ago
June 7, 2019
2 replies
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Partnership A has used all its available funds to pay certain business expenses of affiliated Partnership B and Partnership C in the same tax year. Partnership A has no net income, no assets and no liabililties. How should I prepare the Partnership A business return ?

Anonymous

your question does not make sense. you state income of partnership distributed to affiliated LLC's and also state that it has no income. seek out a professional who can review the history of the companies and their relationship to one another and the relation of the owners of each partnership to one another and their relative ownership %'s. without knowing all this and maybe more, I don't think a correct answer can be given. there maybe even the need for partners to file gift tax returns which if this for 2018 would make them late.

quizsealAuthor

Level 2

Sorry my question was not clear. A capital contribution was made to Partnership A. The funds from this were used to pay the expenses of Partnerships B and C. Partnership A did not conduct business activity during the tax year, therefore did not have taxable income. I am planning to treat the capital contribution as non-recourse financing on the Partnership A return. Any other ideas ?