topic LLC - cash reserve taxed 2x in Deductions & credits

LLC - cash reserve taxed 2x

ProfitPartnersTax — Mon, 03 Feb 2020 16:13:45 GMT

How do we prevent our reserve from being taxed twice? We left $10k in the bank year end and our K1's now include $5k for each member as ordinary income since the 10 K was not listed as an expense. We will also be taxed when we distribute that 10k this year.

Re: LLC - cash reserve taxed 2x

DianeC958 — Mon, 03 Feb 2020 16:45:11 GMT

The reserve will not be taxed twice.

The amount you are taxed on depends on the amount of income reported on your K-1, not the amount of the distributions.

The income you are taxed on is reported in Boxes 1-11 of the form K-1 1065

Link to Form K-1 1065

Re: LLC - cash reserve taxed 2x

ProfitPartnersTax — Mon, 03 Feb 2020 17:23:45 GMT

Thank You Diane. That's what I thought but Turbo Tax if auto filling Line 1 - ordinary income to include the reserve as we enter in the percentage each member gets for Profit.
That number is Gross Receipts minus Expenses = Ordinary income (the reserve is in here)