Hi All - I have a whack situation.
Client has three entities, A, B and C.
At the beginning of the year, Entity A is owned by client and his partner.
Entity B is owned by Entity A and one outside partner.
Entity C is owned by Entity B and two additional outside partners.
Client and all partners decided to convert Entity B and Entity C into SMLLCs and roll up all ownership interest into the overarching Entity A. So now all outside partners, the client, and the client's original partner own a stake in Entity A. Entity A now owns 100% of Entity B and then Entity B now owns 100% of Entity C.
I'm reporting Entity B and C as Final returns and Technical Terminations. Problem is that the K-1s that are being produces are yielding huge losses to the partners. I'm confused as to how I need to report/adjust the K-1s to show that the partnership interests weren't terminated, they were just rolled into the parent.
Any thoughts/tips/advice?
Tons of fun over here!