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Justin 45
Level 1

Partner distribution

I have an annual client that will close operations and they gave me an order to register the expenses as distribution
Would you make a partner distribution account for each partner?
would it be a capital account?
Could it be negative on the balance sheet?
I don't know how to handle this, I'm confused

1 Comment 1
Rustler
Level 15

Partner distribution

they are wrong

 

you enter all expense just as you always would, then you do a final tax return closing the partnership, that return will create a K-1 per partner showing his share of the total income and expense.

 

you close all sub equity account to equity and write a check to cover that amount as an equity draw.  That will zero out the equity for each partner

 

Be sure to payoff all debts first, especially sales tax payable.

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