K1 basis

[Possi]

My client is new to being a partner in the company he works for.
He gave the owner 8k.
Owner paid him 8K as a distribution. Later paid him 3kk more.
Taxed on 11K (box 1 on k1)

Box 16 shows the 8k as basis. I explained to him that the 8k he originally paid the owner is added to his basis in the company and at this time, it is not a "taxable event." He gets taxed on the entire 11k. I keep a copy of the K1 to track his basis when and if he ever gets out of the business.

I'm writing more to validate myself than to ask a question. I haven't seen the basis reflected on the k1 before.

thanks!
~d

[Gretel]

Seems to be a good business getting $11,000 in profits on K-1 as well as as a distribution. The original contribution has nothing to do with profit distribution. Unless is distribution is meant as a liquidating distribution.

[JoshinNC]

Line 16 is showing to him as a distribution (assuming this is taxed as S-corp)

My client is new to being a partner in the company he works for.
He gave the owner 8k.
Owner paid him 8K as a distribution. Later paid him 3kk more.
Taxed on 11K (box 1 on k1)

Box 16 shows the 8k as basis. I explained to him that the 8k he originally paid the owner is added to his basis in the company and at this time, it is not a "taxable event." He gets taxed on the entire 11k. I keep a copy of the K1 to track his basis when and if he ever gets out of the business.

I'm writing more to validate myself than to ask a question. I haven't seen the basis reflected on the k1 before.

thanks!
~d

If he got more than that either it was a taxable gain or a loan to partner. If he got 11k, all of which was profit, than that is the amount that should have shown in box 16.