Final partnership return, prior years checking account sales money used now for expenses to use up, is that added onto return as additional income w/ note? If not where?

[orange-jasper]

Subtracts money used from checking account for expenses from this years sales & throws the partners draws off.  Small 2- family partnership, amount is less than $2,500.00 for expenses.  What wasn't used was added under special allocations for each partner K-1 of less than &1,000.00 each.

[PatriciaV]

No, if you spend cash to pay expenses, you transferred a balance sheet asset (cash) to an income statement expense. Enter only these costs under your business expenses, even if you had no income. 

The partner distributions (draws) should be reported exactly as they were paid under Partner/Member Information. These are not special allocations.

Example:

• Cash at beginning of year = $4,000 (not on tax return)
• Expenses paid out of cash = $2,500
• Distributions to partners = $1,500
• Cash at end of year = $0 (not on tax return)

If these entries are not familiar you, consider upgrading to TurboTax Live Assisted Business. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.