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I will provide some commentary and thoughts to help you in reaching a decision:
I will provide some commentary and thoughts to help you in reaching a decision:
Hopefully this thread is "active." Similar situation to the answer you gave. I received a K-1 that listed business income, although I never received the income. Called one of my partners and he said the income was my percentage of the business money that is in the bank, and I have to pay the tax on my share. Sounded kind of funny, I trust him, is this true? Thank you.
Yes.
You sometimes earn money in an investment that doesn't get sent to you. In that case what has happened is that the money that you earned - and are being taxed on - is being reinvested on your behalf. In this case the business is taking your share of the earnings and using it to grow the business which will theoretically grow your investment.
So, technically, you got the money and spent it on helping the business out. You're taxed on money that you get, not on how you spend it. And you spent your money (without any input from you, granted) on taking care of the business.
Thank you, Robert, very helpful.
In this case how does one pay income tax? ie. Didn’t recieve the money in the bank so where to pay income taxes from?
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