Solved: The question of valuation of each partner's basis ...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
mszhang
New Member

What is the adjusted basis for a LLC partner who only contributes services?

My friend and I have a LLC taxed as partnership. My friend contributes the funding as needed, and I provide the services only. What is my adjusted basis for tax purpose?

1 Best answer

Accepted Solutions
ScruffyCurmudgeon
Level 9

What is the adjusted basis for a LLC partner who only contributes services?

The question of valuation of each partner's basis is not really a matter of the tax filing itself except that the final computations must be used when filing the Form 1065.

Instead, the information that you have presented as to each partner's contribution, and therefore Partner Ownership Interest,  speaks to your need to use a business evaluation that takes in to account the funding amounts provided and the Fair Market Value of the services you provide.  In the latter case, you would have to come to an agreement with your partner as to what would those services cost if a 3rd party, at arms-length, were to be paid to provide identical or near identical service.

Some ideas presented by this author: https://www.thetaxadviser.com/issues/2014/oct/case-study-oct2014.html

Scruffy Curmudgeon--PFFM/ IAFF, Locals 718/30, retired firefighter/medic; univ faculty NOT INTUIT EMPLOYEE
- Strategy & Quantitative Methods Med-M&M, Law discriminatory statistics, Med & PH - epidemiology statistics;
USAR 64-67 AIS/ASA MOS 9301 - O3
-------------------------------------------------------
-------------------------------------No Not an Intuit Employee - Just donating my time

View solution in original post

1 Reply
ScruffyCurmudgeon
Level 9

What is the adjusted basis for a LLC partner who only contributes services?

The question of valuation of each partner's basis is not really a matter of the tax filing itself except that the final computations must be used when filing the Form 1065.

Instead, the information that you have presented as to each partner's contribution, and therefore Partner Ownership Interest,  speaks to your need to use a business evaluation that takes in to account the funding amounts provided and the Fair Market Value of the services you provide.  In the latter case, you would have to come to an agreement with your partner as to what would those services cost if a 3rd party, at arms-length, were to be paid to provide identical or near identical service.

Some ideas presented by this author: https://www.thetaxadviser.com/issues/2014/oct/case-study-oct2014.html

Scruffy Curmudgeon--PFFM/ IAFF, Locals 718/30, retired firefighter/medic; univ faculty NOT INTUIT EMPLOYEE
- Strategy & Quantitative Methods Med-M&M, Law discriminatory statistics, Med & PH - epidemiology statistics;
USAR 64-67 AIS/ASA MOS 9301 - O3
-------------------------------------------------------
-------------------------------------No Not an Intuit Employee - Just donating my time

View solution in original post

Dynamic AdsDynamic Ads
v
Privacy Settings