Partnership LLC

[hero2]

How do you calculate adjusted basis of partner's interest in partnership LLC?

If you withdraw funds or pay partner's  from partnership LLC, is it considered decrease to interest?

Do you include proceeds from HELOC to finance business an addition to the partner's capital account?

[AliciaP1]

Yes, when you withdraw money out of the partnership it decreases your capital account (basis) and any funds you use to finance the partnership are counted as an increase to your capital account.

See Partnership Capital Account for more information on what amounts to use to calculate the basis.

[hero2]

When you use your HELOC to renovate your retail space as leasehold improvements, is this considered increase to capital account even though you have a liability to repay the loan?  Would it be a wash?

[DaveF1006]

To clarify, was the Heloc issued for your personal residence or for your retail space?

@hero2

[hero2]

The HELOC is secured on my personal residence but the funds were used for renovation of the office space for my business.

[AliciaP1]

No, it's not a wash.  You have an increase in your basis because you contributed the money to the partnership and the partnership has a Loan from Partner X on the balance sheet.  When the partnership pays you back for the loan, it decreases both the loan amount due to you from the partnership as well as your basis because your contribution is being distributed back to you.

@hero2