An entity is filing a final 1065 return in 2018.
After clearing all assets and liabilities, their is a positive cash balance.
One partner is disputing between the other two major shareholders.
The cash on hand needs to be distributed but they did not technically receive money. I just need to clear the balance sheet.
The minor shareholder will not let me distribute cash to him since he did not receive the cash.
If I distribute to the other two partners, they will end up with a negative capital account.
The minor shareholder wants me to correct their negative capital accounts by adding guaranteed payments that way the minor partner can take advantage of the additional losses but I find it unfair that the two shareholders must recognize this income and the minor shareholder gets the advantage of the losses.
Is there another way to "distribute the phantom cash" where my two clients will not be penalized by adding guaranteed payments?