LLC has 2 partners 50/50 ownership beginning of the year. Distributions were $20,396 / $17,595. Does their basis/ownership in the LLC change at the end of the year? Does TT Business calculate the change? Will it carry over next year if I transfer info?

[Mike9241]

tax basis = tax basis at beginning of year + each LLC member's share of income less deductions (whether deductible or not) less credits - less distributions box 19 + certain liabilities (part II section k)

here's a link to a worksheet that should help.

https://tax.thomsonreuters.com/content/dam/ewp-m/documents/tax/en/pdf/other/quickfinder-updates/qpep... 

no Turbotax doe not track basis. that's each member's responsibility.

if there's any activity in the LLC the members' tax basis will change

[abholcomb]

So for instance, each partner contributes $5000 basis for equal 50/50 split of partnership.  Add 50% share of $50,000 income is $5,000 + $25,000 = $30,000 each.

Minus distributions taken of $5000/$3000 each.

30,000 - 5,000 = 25,000

30,000 - 3,000 = 27,000

25,000 + 27,000 = 52,000

25,000/52,000 = 48%

27,000/52,000 = 52%

So their new partnership at the end of the year is 52/48. is this the differnece in their capital account or in ownership?  TT is not letting me change the percentage for the end of the year.

[ZoltanB45 · Accepted solution]

The distributions and the contributions affect each ending capital account, not the ownership percentage. The person who took out more money is still a 50/50 owner unless you guys have discussed changing the balance of ownership. The fact that one partner took $5,000 or $3,000, does not change your partnership agreement.

If you guys were dissolving or liquidating, the person with the higher capital account should receive more money or assets than the person with the lower.

[abholcomb]

Mike 9241, Thank you for helping me calculate the capital account. Zoltan B45, thank you for solving my question about ownership percentage and understanding when to apply the revised percentages to the capital account. Sounds like it's a running total year after year. This is our first year filing a 1065, next year should be much easier.