Initial cash contribution

[DTS]

Partnership operating agreement states that each partner is to contribute $$,$$$ equally, but only one does, his share and the share of the other partner. The other partner will never pay this back to the other fellow.

I'm not sure if the contributing partner has doubled his contributed capital or only his stated amount in the o/a.

What is the proper way to handle this? Or, what are some ways this can be handled?

Thank you,

D

[Gretel]

Sounds like a gift to me. As such each partner is deemed to have contributed $1000. I believe this arrangement should be in writing some place. Just my opinion.

[DTS]

Gretel

So, are you saying you feel like I should show the equal equity accts as shown in the o/a and then they can make their own deal off the books as they see fit?

Thanks,

D

[DTS]

I need to vent!

Forget this whole post and all the hard work I've put into this stupid "partnership" the last couple of days. I just got off the phone with the member I'm working with and he tells me that the other partner quit 1 day after the operating agreement was signed!!! Why didn't he save me tons of work setting all this up in the computer, creating balance sheets, spending 45 minutes with the IRS finding out if they made an S election (he couldn't remember), blah, blah.

OMG, I'll tell you something, I think I have the dumbest and most secretive clients anyone could have. I am so disgusted right now words can't say.

[S T]

Not to add to your frustration

But a question,

Doesn't the member/Shareholder/Partner, whatever he is, have a tax responsibility in this equation? Don't you have to account for the period of time this "party" was participating in the entity venture?

Just a question,

Sandy

[DTS]

Hey,

you know I'm too mad to discuss this right now!

My understanding is that the other partner bailed one day after signing the agreement, no business activities started yet and no money put in on his part, so nothing to settle up with him. The partnership ended when the one guy dropped out.

I'm still working through this, but I think I either have to file a return with $0, as the IRS is expecting a return or file the partership with one partner (as the IRS is expecting to see the return) and deal with the notices later. I don't know, yet. I know I can file the LLC as a sole prop, but not sure I should. Any suggestions?

Makes a person want a cigarette and a VO!

D

[S T]

Just Bumping

Just thought I would give a "heads up" as I knew you had more questions.

Wouldn't you file the partnership/S corp (did you ever find out if they filed the S Corp election) as no activity and as final, then not sure, file the LLC as a Sched C.

Hopefully someone else will jump in on this post.

Gotta Luv our clients! They just have no idea what challenges they present!

Sandy

[DTS]

Wouldn't you file the partnership/S corp (did you ever find out if they filed the S Corp election) as no activity and as final, then not sure, file the LLC as a Sched C.

No S election. Yes, this is what I'm planning on doing. Initial, final and all $0 and then put it all on a Sch C. What is so maddening is the repeat of all the work, detail sheets of expenses, etc.

I am not so mad now. Not happy, but not as angry. I needed a little time to relax and think calm thoughts.

[dsi]

It must be cocktail time.

[DTS]

It must be cocktail time.

Dennis mad and armed with a cocktail...not a good combo

D