My partner and I formed an LLC to purchase a condo for rental purposes. We started with a capital account for the purpose of depositing rental income and providing funds to pay HOA fees, taxes,, insurance repairs, etc. We have replenished the account as needed since our costs in the first year have exceeded our rental income. Our property value exceeds $1M so we have to fill out schedule M-2 on our 1065. On schedule M-2 we show our capital contributions in line 2, and we have a decrease to our account as a result of the expenses exceeding our income, but we have made no distributions to ourselves. Do we enter this amount in line 6 (Distributions) even though we have not distributed funds to ourselves or line 7 (Other decreases)?
