I have a 2 member LLC (50/50) that I made 2 loans to (with interest) - one in 2014 and another in 2015. I converted both loans to member equity in 2015 when the other member added an amount of owner's equity to equal the principle and interest. How do I record the conversion in the 1065 forms? Thanks!
Tim
This is all balance sheet. It appears that the interest was never paid and just accumulated; in a case like this the IRS may want to take a position that this was equity from the beginning so converting makes sense.
Additionally, it appears that the other member contributing more $$ as well, the economics stay the same; which is good.
On your balance sheet you would just make the following entry; Dr. Member Loan Cr. Member Equity. Essentially you are just reclassing the loan to equity.
Our experts are available on-demand, no appointment needed. Get help all year long with TurboTax Expert Assist.
Enter your E-mail address. We'll send you an e-mail with instructions to reset your password.
©1997-2022 Intuit, Inc. All rights reserved.
Intuit,
QuickBooks, QB, TurboTax, ProConnect, and Mint are registered
trademarks
of Intuit Inc. Terms and conditions, features, support, pricing,
and service options
subject to change without notice.
Security
Certification of the TurboTax Online application has been
performed by
C-Level Security.
By accessing and using this page you
agree to the
Terms of Use.
Accessibility
