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Posted by Vijay Sharma on June 29, 2006, 12:35 am
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Please confirm - I understand for a S Corp or LLC elected a
partnership, the "excess of distribution over basis" is a
Capital Gain which goes to just Schedule D of Form 1040 of
the shareholder/member and is not reported anywhere on
Schedules K and K-1s of Forms 1065 or 1120S because the
capital gain is a personal (shareholder) one and not a
corporate one. Is this not correct? I do realize that the
"total distribution" does go on line 19(a) "Distributions of
cash and marketable securities" of Schedule K.
If the Capital Gain or "excess of distribution over basis"
does go on Schedule K or K-1s, please tell me the line
numbers where they go. I read instructions but did not find
anything on this.
Is the above also true for a Sole Proprietor whose draws
exceed his equity/basis, meaning the excess is a capital
gain reported on his Schedule D? Obviously, he won't have
Schedule K and K-1s.
Thanks in advance for your help
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