LLC loan basis confusing

Technical topics regarding tax preparation.
#1
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Sch K-1 shows 2000 beginning capital account, 7000 current net loss, ending capital account -5000. And in Partner's Share of Liabilities beginning recourse is 6000 and ending recourse is 6000. If I put the Partner's Share of Liabilities in Lacerte, 6000 beginning 6000 ending, the 6000 is not used as basis to allow the additional 5000 of loss. I can't figure out why not. To confuse the matter, if I show -0- as beginning recourse and 6000 as ending recourse, then THIS 6000 is used as basis to allow the 5000 additional loss. On the basis schedule it includes this 6000 as Change in Partners Liabilities.

I just can't figure out why the software won't use the 6000 as basis if listed in beginning and ending liabilities. I don't care if the recourse debt has been sitting there for ten years. It is still this partner's debt and it should be used as basis.

I must be missing something. Any guidance appreciated.
 

#2
AlexCPA  
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My understanding is that Lacerte uses the difference between the beginning and ending debt allocation to adjust the basis for each partner. This is why you're seeing that entering -0- as the beginning recourse liability and adding the ending amount of $6,000 is changing the basis while having $6,000 as both the beginning and ending amounts is not providing additional basis for the partner.

With that said, the debt basis should already be included in the beginning basis amount for the partner for the calculation to be done correctly in Lacerte.
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#3
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Thank you AlexCPA. I was just coming back here not knowing you had written because the answer came to me, that answer being exactly what you wrote. The tax preparer of the K-1 had never listed shareholder liabilities before. Especially not in 2018. He didn't even list them on this 2019 K-1, until he issued a corrected K-1. Another member of the LLC must have called him. So this year he shows beginning and ending recourse as 6000. The original 6000 was never earlier included in Adjusted Basis on Lacerte. I will put -0- in beginning and 6000 n ending and this will take care of it. It really doesn't make any difference when the 6000 came into being. I appreciate your input.
 

#4
AlexCPA  
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You're welcome! The other tricky aspect is tracking the amount at-risk. While recourse and qualified non-recourse liabilities provide at-risk basis, non-recourse liabilities do not so each respective category would need to be tracked separately. :shock:
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 


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