LLC A is owned by a husband and wife 50-50. LLB B is also owned by the same husband and wife. Both LLCs are taxed as partnerships for federal income tax purposes. Both have sufficient tax capital accounts for H&W before and after the transfer below.
During 2019, LLC A transferred cash to LLC B. After a conversation with the client, this is not a loan. There is no expectation to ever pay it back, nor is there any kind of loan agreement.
Is it more appropriate to list this as a deemed distribution on line 6a of the M-2 (with a footnote on the K-1), or as an Other Decrease on line 7 of the M-2 for the transferor LLC A?