LLC, 4 members invested equally for real estate, sold property and gave back capital investment, where do I enter that amount for K-1 to keep it separate from taxable distributions

Forum|Forum|4 months ago
January 20, 2026
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LLC formed by 4 members, equal shares, to buy real estate in 2017. Property bought then was sold in 2025 and the initial capital investment of each member was returned at the end of year from the property sale as well as additional profit distribution. I've searched a lot of questions/answers here and the software and can't figure out how to enter the capital investment return to the members separately from the profit (capital gains) distribution so that members aren't hit with taxes on money they put in to start the LLC. Thanks in advance for your guidance!

TurboTax Business Windows

AmeliesUncle

Level 15

Distributions are not taxable (unless they are in excess of Basis).

The program should already know how much it paid for the real estate and the amount of depreciation, then you'll enter how much it sold for. It will then calculate the taxable gain based on that information. The 1065 and its K-1s will then only reflect the gain.

RosaleeMcSAuthor

Level 2

We are a Texas LLC if it matters. The program wasn't in use in 2017 so it doesn't have the history of capital investment to the LLC to purchase the property. The real estate asset disposal calculates the capital gain on the property correctly, but disbursements paid to members are taxed on our personal taxes as income. The return of initial capital investment should not be taxed again federally as income based on my understanding. I figured somewhere in the program there was a place for return of personal capital investment but I can't find it.

RosaleeMcSAuthor

Level 2

I think I see how to get it to calculate correctly. I think I need to enter the capital investment for each member into the members area and then include the capital return in the distributions? Then turbotax should figure everything else correctly based on the disposal and regular income/expense info.

If someone could confirm I'm on the right track, that would help.