topic Why is profit showing up as partner capital in Business & farm

Why is profit showing up as partner capital

osty38 — Mon, 03 Jun 2019 17:28:00 GMT

We have a real estate agency. We made X amount in gross sales (2 partners and 4 reps). If I enter that amount into form 1065, income, it is showing up as partner capital and requires me to balance beginning year with end of year. This is crazy. this isn't capital. We only started this business in December of 2016, so 2016 tax return was minimal. I know this is coming up because gross sales were over 250,000. Should I just be using what we paid the sales reps and not take the fees/etc. under deductions? This is very confusing.

Enter the gross amount of sales and then enter your expen...

IreneS — Mon, 03 Jun 2019 17:28:02 GMT

Enter the gross amount of sales and then enter your expenses. Commissions paid to the sales reps are part of those expenses.

The partnership capital account is an equity account in the accounting records of a partnership. It contains the following types of transactions:

Initial and subsequent contributions by partners to the partnership, in the form of either cash or the market value of other types of assets
Profits and losses earned by the business, and allocated to the partners based on the provisions of the partnership agreement.
Distributions to the partners

The ending balance in the account is the undistributed balance to the partners as of the current date.

I still need to know where I enter distributions (commiss...

osty38 — Mon, 03 Jun 2019 17:28:04 GMT

I still need to know where I enter distributions (commissions) to partners.

If you entered each partner's percentage (in Business Inf...

IreneS — Mon, 03 Jun 2019 17:28:05 GMT

If you entered each partner's percentage (in Business Info > Partner/Member Information) TurboTax will calculate the distributions and put them on each partner's K-1.