Initial Investment Years Ago and Withdrawal on Final Report

[John1461]

I am closing a business LLC. I made an initial investment of $75,000 in 2017. Now that the business is closing, how do I report the withdrawal of the initial investment of $75,000 with no gain or taxes to be paid since I gained nothing?

[ThomasM125]

The entry to record the distribution on your books would be to credit cash and debit owner or partner equity. As far as the tax return is considered, you pay tax on the company's earnings in the current year. If you withdrew more than your basis (retained earnings), then you would have an additional capital gain to be reported that you could include on the LLC K-1 schedule or simply reported it as an investment sale on your personal tax return. Since you don't have that, you don't need to reflect any capital gain income on the schedule K-1 or your personal tax return.

[dockalin_md]

Hey Thomas, Similar question here. I'm retiring and transferring my 50 % interest in ownership to our son. He now owns 100% of the shareholder stock and debt basis, which, after selling equipment and equal distributions in 2024, is $5500. Should this be reported as a loss on my personal return?