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Level 2
posted Dec 4, 2021 11:18:33 AM

LLC distributions

I am in a 4-member LLC that owns rental property. The members are two married couples. We sold a property in 9/21 and took a $62,500/member distribution. One of the members died after the property sale and distribution. The deceased member's spouse inherited her share of the LLC. I indicated that the deceased member "left" the LLC during the year. Turbotax correctly prorates Part III income and expenses between the decedent and the surviving spouse. Turbotax will not allow me to allocate a distribution to the deceased member. Consequently, section L of her K1 analyzing each member's capital account is not correct. My workaround is to add the $62,500 distribution to the surviving spouse's K1. Is this approach correct? It seems to me that the distribution was made before the decedent "left" the company and her capital account should reflect that distribution.

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1 Replies
Level 12
Dec 4, 2021 1:24:20 PM

You should get a lawyer and a tax pro BUT the approach is not wrong.