- quote -

Thanks for your response.

- quote -

Are you talking about the "total distribution" or just the
"excess of distribution over basis" being reported on
Schedule K? What line of Schedule K (Form 1065)?

I was under the impression that this capital gain is a
personal (shareholder) one and not a corporate one so
Schedules K and K-1s would not be involved just Schedule D
of Form 1040? I do realize that the "total distribution"
does go on line 19(a) "Distributions of cash and marketable
securities" of Schedule K.

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- quote -

If you have no imagination, you can create a dull-sounding
line entry and call it "Excess of Distribution over Basis"
and account for it there. Or do the same thing with a
sexier sounding title like "Distribution Gain" which will be
guaranteed to confuse almost everyone :-)

When you get through with it, Sch K will call for it to be
transferred to a 1040 Sch D.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Arthur Kamlet wrote:
- quote -

Thanks for answering my question. I have a follow up
question -

- quote -

Is this true for financial accounting (books) as well?

Say basis on the books is $20K and Distribution comes out to
$25K. On the S Corp or LLC's books the g/l entry would be
Debit R/E $20K, Credit Cash $25K, what is the remaining
debit entry for the $5K then?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Vijay Sharma <SharmaV[at]Sutterhealth.org> wrote:

- quote -

Report on Line 1 or 8, depending if short or long term.

- quote -

It would if shareholder basis could be negatve, but it can't.

It's sort of part of the religion of tax accounting: "Basis
cannot go negative."

- quote -

And that rule holds for partnerships too.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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I understand that the excess of Distribution over
Shareholder Basis in a S Corp is reported on Schedule D of
Form 1040 as Capital Gain. What line of Schedule D does
this go on? I tried reading the instructions but did not
find anything about excess of distribution over shareholder
basis. The excess distribution would throw the
Shareholder's Basis into negative on the Books, correct?

Also, is the excess treated the same (reported on Schedule D
as Capital Gain) in a LLC elected as a partnership for tax
purposes?

Thanks in advance for your help.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >