There is an interview page where members are allocated ownership percent and profit & loss percentages for beginning/end of year. I'm guessing, if it can be done, that would be the place? But how?
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there are probably tax consequences for both that should be considered. say both have $0 basis at the beginning of the year. the LLC earns $100,000 each member receives $50,000 one receives $100,000 of income
the one receiving the $50,000 but no income has a $50,000 capital gain (distribution exceeds basis)
the one receiving the $100,000 in income has to report (maybe pay Self Employment tax too) it in addition since his basis is $100,000 (the income) before distribution and $50,000 after he has a $50,000 capital loss (if this is only item of capital gain/loss for year only $3,000 would be deductible ther est would need to be carried over.
then there is IRC code section 704(b)
Determination of distributive share
A partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof) shall be determined in accordance with the partner’s interest in the partnership (determined by taking into account all facts and circumstances), if—
(1) the partnership agreement does not provide as to the partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof), or
(2) the allocation to a partner under the agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect.
in other words the IRS could challenge the income allocation
anyway in TT there's a page for partners where you would indicate the date of change and the new %'s
however, my advice, is to see a tax pro before you do something that could result in substantial tax penalties
there are probably tax consequences for both that should be considered. say both have $0 basis at the beginning of the year. the LLC earns $100,000 each member receives $50,000 one receives $100,000 of income
the one receiving the $50,000 but no income has a $50,000 capital gain (distribution exceeds basis)
the one receiving the $100,000 in income has to report (maybe pay Self Employment tax too) it in addition since his basis is $100,000 (the income) before distribution and $50,000 after he has a $50,000 capital loss (if this is only item of capital gain/loss for year only $3,000 would be deductible ther est would need to be carried over.
then there is IRC code section 704(b)
Determination of distributive share
A partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof) shall be determined in accordance with the partner’s interest in the partnership (determined by taking into account all facts and circumstances), if—
(1) the partnership agreement does not provide as to the partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof), or
(2) the allocation to a partner under the agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect.
in other words the IRS could challenge the income allocation
anyway in TT there's a page for partners where you would indicate the date of change and the new %'s
however, my advice, is to see a tax pro before you do something that could result in substantial tax penalties
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