I am part of a four-member partnership - with equal shares (25%) of ownership.
This year (2018), one of the partners left and was immediately replaced by a new member.
We decided to pay the leaving member 25% of the equity in the business at the time of his departure (based on the balance sheet as of his last date of participation).
How should that payment be reported (by the partnership) for tax purposes?
It's not a guaranteed payment, and I don't believe it's a deductible expense.
Partnerships don't issue 1099-DIVs.
Go back into the "Business Info" tab and select "Partner/Member Information". Work through that until you come to the "Partner Capital" page (pic below) and enter the necessary information.
You won't " accrue the expense" because it's not and "expense", it's a "distribution". Assuming that the partnership uses cash basis accounting this transaction is a 2019 transaction.
Tom Young
Partnerships don't issue 1099-DIVs.
Go back into the "Business Info" tab and select "Partner/Member Information". Work through that until you come to the "Partner Capital" page (pic below) and enter the necessary information.
You won't " accrue the expense" because it's not and "expense", it's a "distribution". Assuming that the partnership uses cash basis accounting this transaction is a 2019 transaction.
Tom Young
Thanks so much, Tom. The screen shot helps immensely. This is exactly what I was expecting, but I can't seem to get to that screen. The Member Summary page says "Select Edit if you need to enter... Distributions of cash or property to members", but I never get taken to a page to do that. Weird. I may need to reach out Intuit support on that.
The Partnership uses accrual accounting, which is why I assumed we'd accrue the expense / distribution - so that the value of the business at the end of 2018 shows that we have an outstanding liability to this partner.
You should be able to click right through that interview to get at that page. It's right after the "Enter Partner Percentages" page. It sounds like you might be over in the "Balance Sheet" interview somewhere.
Thanks again, Tom. Turns out I'm not the only one experiencing this problem.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4625191-unable-to-get-the-partner-member-capital-screen-in-turbotax-business">https://ttlc.intuit.com/questions/4625191-unable-to-get-the-partner-member-capital-screen-in-turbotax-business</a>
Ah... One of those TurboTax glitches that only affect an unlucky few!
Has this issue been resolved? I'm working on 2019 taxes and still finding no option to enter a former partner's distributions.
Trying to understand partnership reporting using K-1, I guess. Thanks for any help