Deemed Distribution

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?

What is there that is 'deemed' about it?
Actual cash was transferred. If it's not a loan, it should be reported as a distribution from one and a contribution to the other.

Thank you for responding.

I was calling it "deemed" as the cash did not actually hit the hands of H&W, but you're right, it's a distribution regardless.

Thanks again.

Maybe "constructive" would satisfy everybody.