How do I record unequal distributions to partners in an LLC so each partner is only responsible for taxes on his portion of the profits based on his distribution?
I have an LLC with two partners (50/50). The distributions have been disproportionate for a years and we want to make sure we're recording everything accurately. Is there a way that each partner would only be responsible for taxes based on the percentage their annual distribution?
The business has a profit of $100,000. Partner A takes a $30,000 distribution while partner B takes a $50,000 distribution and $20,000 stays in the bank. Instead of each partner paying taxes on $50,000, we want partner A to show $40,000 ($30,000 + 1/2 of the remaining $20,000) and partner B to show $60,000.
Is this possible? Could we use a Guaranteed Payment? How would we record it? In QB we each have an Equity Account with three sub-accounts; Distributions, Equity and Contributions.