Income for LLC

[ladmo19013]

My family used money from my deceased father's accounts to open an LLC and invest the money in a Mutual fund.  Is the initial amount received from my father considered income for the LLC?

[Anonymous_]

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@ladmo19013 wrote:

Is the initial amount received from my father considered income for the LLC?

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No. The amount would be considered a capital contribution.

[ladmo19013]

Is this something I will need to report on a 1065?  (Capital distrubution?)

[Anonymous_]

You should enter each member's contribution.

The members need to keep track of this figure.

[Vanessa A]

No, the initial amount received would not be income, it would be partners capital investment.  How it is allocated would be dependent on the agreements with the estate and family members. 

[ladmo19013]

So that information - will go on each members Schedule K-1(1065) under Section L  as capital contributed.  Only their % of the entire amount, correct?  Will their % also go under ending capital for that individual, or would that be the entire amount we inherited & invested?

Thank you

Laura

[Anonymous_]

Yes, only their percentage of the entire amount. 

Note that the ending capital figure is calculated.

[Anonymous_]

@ladmo19013 

I will also note that you will have to check a box (or boxes) on the one of the worksheets and forms in order for the capital account figures to appear on the Balance Sheet (if you need that) and Item L on the K-1s.

I would highly recommend that you consider seeking professional guidance for this matter, at least for this first filing.

[ladmo19013]

I am trying to find professional guidance, but having a hard time - everyone is short handed and swamped..  Another question - Codes for Principal Business Activity and Principal Product or Service.. what would you put for a family?  We don't have a business of any kind.  All we did is put some money in a checking account for home repairs, and the rest in a mutual fund for future repairs.  Can I leave that blank?

[Vanessa A]

You can enter the standard generic 999999 code.  The code is not important, it is simply for data gathering purposes, it does not affect your return in any way, shape or form. 

[ladmo19013]

Thank you Vanessa A -

one more question - since we invested the inheritance in a managed mutual fund, I received 1099 Div and INT statements - on the 1065 Schedule K, should I enter the entire amounts and then only the % of each member share on their individual Schedule K-1 forms, or would I enter the entire amounts on each member K-1?

[JulieS]

Yes, you enter the full amount on Schedule K and the program should apply ownership percentage on the K1 for each partner.

You are correct that only the partner's percent should appear on their K-1 form, but the program should allocate it automatically based on the global settings for your K-1 forms. 

[ladmo19013]

Turbotax business - under capital gain distributions - What does “28% rate capital gain (loss)” mean under capital gain distributions?  It asks for total capital gains distribution (which is 2a on 1099-DIV), then it ask the 28% question.

[RobertB4444]

It is asking if any of your capital gains came from the sale of small business stocks or from the sale of collectibles (like a stamp collection).  Gains from those are taxed at 28%.

Here is the IRS guidance on capital gains.

[SweetieJean]

You may wish to seek out the help of a local tax professional for all this.