Need your opinion

[AccTaxMan]

Taxpayer formed a partnership with an investor in 2008 to start a business. The investor put in $30,000 in 2008 as investment. No income was made in 2008 because the business was still in the stage of planning and being setup. But the taxpayer had already withdrawn the $30,000 to compensate himself for the setup and planning works.

How should the situation be reported? I think the $30,000 is considered compensation to the taxpayer. But what about the partnership and the investor?

[ChEAr$]

The very first question

you have to ask your client ( I suppose your use of "taxpayer" really means your client),
is about the partnership agreement. Get him to bring you a copy of it.

Some people will say they're partners with another when in reality all that happened is the
other fellow lent them money, not intending to be an actual general or limited partner, but
just to get some kind of return on the investment.

One good rule of thumb for everybody is never to accept a partnership as a client without a
copy of THE partnership agreement.
Same for corporations and LLC. always get a copy of the Articles of Incorporation or
LLC agreement for your files.

[kaimana]

and consider possible fraud kaimana

[BHoffman]

http://jobs.irs.gov/home.html?portlet=5