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Frequent Explorer *

How do I record a capital call payment made to another company?

Our company (an LLC) is partial owner in a different company (also an LLC). The different company has just asked for a Capital Call where each partnering company must pay X amount based on their % of equity in the company.  My question is how do I record this "payment" in our company's books to show as an asset? This is the first time we have had to pay into the company, so this is new to me.

4 Comments
Established Community Backer ***

Re: How do I record a capital call payment made to another company?

LLC means nothing, how the two companies are taxed is the issue.

 

Is the capital call a loan is being used for cash flow until financing comes through - are you going to be paid back in other words?

 

you say the partners have to pay so much per equity share - if the company (partnership) owns part of another company, then the partnership owes the money being called - not each partner

Frequent Explorer *

Re: How do I record a capital call payment made to another company?

The company that we are putting funds into is being sold to a publicly traded company. The capital call is being used for cash flow and for some repairs of equipment that have to be completed before the sale.   We will not be paid back in cash, but in shares of the publicly traded company. 

 

There are a total of 6 partners that currently own the company- each owns a different %. To use round numbers, let's say the capital call is for $100k.  Our portion is 10% or $10k. The remaining $90k will be paid in by the remaining partners (whom are not associated with our company). 

 

So, how do I enter our $10k payment into QB? 

Established Community Backer ***

Re: How do I record a capital call payment made to another company?

The partnership should have an asset account with a value representing the investment, I would write the check and use that same asset account as the expense for the check, an increase to basis in other words

 

BUT, You really should talk to a tax accountant, I am not one.

Frequent Explorer *

Re: How do I record a capital call payment made to another company?

Well, thanks anyway. I was hoping someone in the community might have come across a similar situation and know how to enter it.

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