Reporting Unreimbursed LLC Expenses in TurboTax Business

[csully]

Background Information:

• My wife and I established a multi-member LLC in May 2024 (Tennessee), each holding a 50% ownership interest.

• Before and after forming the LLC, we incurred various legitimate startup and operational expenses using a personal credit card.

• We did not reimburse ourselves from the LLC for these personal credit card expenses.

Questions:

1. Since we incurred expenses on our personal credit card both before and after forming the LLC and did not reimburse ourselves, can these charges still be recorded as deductible expenses on the LLC's tax return (Form 1065)?

2. If these expenses on the personal card aren't deductible, where exactly should they be recorded in TurboTax Business?

3. There is a section in TurboTax business where it asks you to enter the "Cash Member Contributed to LLC." Does the term "cash contributed" specifically refer only to funds directly deposited into the LLC’s bank account, or would our unreimbursed personal credit card expenses also qualify as "cash contributions" for tax purposes? If they aren't cash contributions, are they considered additional capital contributions instead?

[ThomasM125]

You could deduct the expenses on the partnership return either by reimbursing the partners for the expenses or recording a note payable to them for the same and then charging the various expenses when you record the payment or loan. Another less complicated option would be to deduct the unreimbursed partner expenses when you enter the partnership Schedule K-1 on your personal return. You will see a screen that says Describe the Partnership and there will be an option to indicate you payed expenses on behalf of the partnership. On the screens that follow you can list your expenses and they will be deducted from your income via an entry on Schedule E:

You could treat the expenses as cash contributed if you didn't want to deduct them. If you deduct them however, they wouldn't be consider contributed capital.

[csully]

Hi @ThomasM125, 

Thank you so much for your response! It means a lot that you took the time to help me out.

1. If I deduct the unreimbursed partner expenses when I enter the partnership Schedule K-1, do I still have to record these expenses somewhere on the 1065, or do I only mention them when filling out my personal return?

2. It's not a very large amount, so if I don't want to deduct them, are you saying that I can add these expenses to the cash contributed section and just leave it at that? Would I have to make note of these expenses anywhere else between the 1065 and my personal return using this method?

• Sorry for all the questions on this. Someone told me that I can record these personal credit card expenses as cash contributions and deductible expenses without reimbursing myself because the LLC was formed in 2024, so it is expected to have some crossover during the formation process. Is that true? 

3. Totally different question, but you seem like the right person to ask. At the end of the year, we had a $55.15 balance on our business credit card that was paid in Jan 2025 using the business bank account. Since these charges were created in Dec 2024 but weren't paid until Jan 2025, how should this be recorded on the 1065? Is it considered a liability? If so, what kind?