Partnership Liquidating Distribution

[aj_techman]

I am part of a four-member partnership - with equal shares (25%) of ownership.

This year, one of the partners left and was immediately replaced by a new member.

We decided to pay the leaving member 25% of the equity in the business at the time of his departure (based on the balance sheet as of his last date of participation).

How should that payment be reported (by the partnership) for tax purposes?

It's not a guaranteed payment, and I don't believe it's a deductible expense.

Should the partnership have provided him with a 1099 (as well as a K-1)?

[aj_techman]

Follow-up questions:

1. Should this be reported on a 1099-DIV to the partner, or on box 19 of the K-1?
2. In either case, where do I enter those amounts in TurboTax Business?  (I don't see any way to enter K-1 box 19 information.)
3. To make things more complicated, the business hasn't yet cut the check for this amount; so we will accrue the expense and then actually pay the partner in 2019.  How does this affect the tax reporting?  (The business recognized the expense in 2018, but the partner won't receive income until 2019, so a 1099-DIV seems out of place.)

[aj_techman · Accepted solution]

I got the answers I needed over here:

https://ttlc.intuit.com/questions/4631816-how-should-a-partnership-report-a-distribution-to-a-partne...

(I feel like sometimes there are too many different places to look for answers regarding TurbotTax...)