Adjusted Basis for an LLC partner

[cathyatcalan]

I have used Quickbooks for several years for our LLC.  We also use Turbo tax to complete both LLC taxes and personal taxes.  We have had our business for 16 years.  It has always been an LLC.  We have 3 partners.  Two of the partners take guaranteed payments.  This year due to a large profit, we decided to give distributions.  When I researched this, it seemed that as long as the amount distributed was less than the amount contributed to the business, it would not be taxes on your 1040 return.  When I went to complete one of the 1040 for myself, as I was entering the numbers from the K-1, the taxes kept rising and when I entered in the amount of the distribution, it rose even higher.  How do your enter in your adjusted basis for your interest in the LLC.  I thought it would keep tract of the capital contributed over the years, but it is not using that to see if the distribution is taxes.  Any help would be appreciated.  

[LudwigVan_fan]

First, you need to keep track of your basis in the partnership.  It is much more complicated than just comparing the amount contributed vs. distributions.

As long as the amount distributed is less than the basis, it is not taxable.  If more than the basis, it is taxable, probably as LTCG.

What is happening is you probably not entering correctly in TT, the distribution.  I'm not familiar enough with TT to know exactly what might be happening, but make sure that distributions is not part of ordinary income or income items entered from the Sch K1.

As for computing basis, here is a link to Pub 541, Partnerships.  That might help you out

https://www.irs.gov/publications/p541