Okay, the operating agreement for a partnership-taxed LLC allocates all depreciation associated with property financed by a recourse loan to the member who cosigned for the loan. I can see from IRS Audit Guide for partnerships that this arrangement is perfectly reasonable (it's cited in Example 6-1 of the 2007 edition), but I want to be sure that I understand how to actually document it.
I'm thinking that I report the depreciation subject to special allocation on Line 16b ("depreciation reported on Form 1125-A and elsewhere on return") and then include it on Schedule K-1 in Box 13, Code W. Is that correct?
I'm thinking that I report the depreciation subject to special allocation on Line 16b ("depreciation reported on Form 1125-A and elsewhere on return") and then include it on Schedule K-1 in Box 13, Code W. Is that correct?