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3 Replies Latest reply: Mar 19, 2011 10:06 PM by bm911tax RSS

Taxes and LLC's

Newbie
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4 years ago I went into partnership with my brother-we each invested 30k.

 

the partnership was disolved 2 years ago with me agreeing to buy his equity out at the same amount as he invested =30k.rather than going bankrupt- I then formed an LLC.

 

I paid him off last year and my accoutant is telling me that the 30k is counted as taxable income for me-should'nt this be an expense?

 

My LLC spent 30k to pay expenses incurred during the partnership.

 

I'm so confused-please help!

 

Eric

  • Taxes and LLC's
    Barky Dog Apprentice
    Currently Being Moderated

    Hey Eric,

     

    So sorry to hear about your partnership experience with your brother.  I hope you guys were able to dissolve the partnership amicably.  Sadly, that is often not the case.

     

    Regarding the $30k as taxable income, it sounds like you need to get a second opinion from another accountant.  Your current accountant may be right, but it would help your "peace of mind" immensely to have a different accountant provide their insight. You might just be able to pay them for an hour of consultation time.  Oh, and don't tell your current accountant about your "second opinion" - it may hurt their feelings.

     

    Anyway, that is my advice.

     

    Good luck,

     

    - Barky

  • Re: Taxes and LLC's
    Bridge Expert
    Currently Being Moderated

    Either we did not get all the facts or your accountant did not. 

     

    If the parnership was dissolved 2 year ago did you form a new LLC or was it not technically dissolved?  Since you paid $30,000 was this for assets or stock or were you just paying back a "loan"?  I still can not figure out how it is income though.  Seems like we only have 1/2 of the story.

  • Taxes and LLC's
    bm911tax Apprentice
    Currently Being Moderated

    to many unknowns (as noted by other posters already), if the original partnership was dissolved why are you buying his interest, if you transferred the interest to a new LLC and then purchased his interest then it should not be income to you.

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