My business partner and I were each 50/50 partners on an LLC until December 31st of last year. At that point, I purchased his "shares" (LLC units) for $X and then owned the LLC 100%.
How does the $X get reported on the business or personal taxes? I couldn't find anywhere in TurboTax (Home & Business) to report it, and I'd have to believe that it gets reported somewhere for both of us.
As well, the profit that was made last year up until the point I bought his shares would be split on our taxes as well?
The partnership does not report anything related to this "purchase" since it was you individually that purchased the units.
The partnership will file a final return through the date of sale. The income / loss will be allocated based on ownership up to the date of sale. Make sure you indicate that this is a final return and both K-1's are marked final.
All activity post sale transaction will be reported by you individually on your personal tax return on form Schedule C.
There are a number of issues here. I have attached a link to an IRS revenue ruling that explains what happens in this instance. It can be fairly complicated and depending on the $$ you may want to get some assistance from a tax professional.
If the partner purchased his partner at this basis, how do you report on the K1 for each partner?
Is it reported as a contribution/distribution?