Loan modificaton - LLC rental

[oceanlovin'ea]

I don't know if I have all the facts yet, but this is what I think I know.

Client has an LLC (husband and wife) with a rental property in it.It is taxed as a partnership. They did a loan modification with bank and lowered their balance.
She sent me an email saying she has a letter to go on husband's return.

Wouldn't the loan modification have to be reported on the LLC partnership return and then flow through to personal return.

They are way way upside down on this property. Payments haven't even covered interest for several years. Have had to put personal funds into LLC to pay bills.

Thanks for thoughts.

Linda, EA

[Gretel]

I agree with your conclusion that this should be reported by LLC and then flows through. However, maybe the title and/or loan is not in the name of LLC?

[oceanlovin'ea]

It isn't

She sent me an email this morning. The house is in her husband's name and social security number.
But I do have to make some adjustment on the LLC's records. The loan balance is much lower than last year.
What would my corresponding entry be to offset lowering the loan balance?

Linda, EA

[JoshinNC]

Then the LLC doesn't own anything and now you have amended returns to do

She sent me an email this morning. The house is in her husband's name and social security number.
But I do have to make some adjustment on the LLC's records. The loan balance is much lower than last year.
What would my corresponding entry be to offset lowering the loan balance?

Linda, EA

I would believe. Probally would have been nice to know that the LLC didn't actually OWN the house, huh?