[aleles]

Hi,

If I made a cash investment into an LLC in exchange for a percentage of future profit sharing, should they give me a K-1 schedule for the amount of my investment even though I'm not a partner in the LLC?

Thanks in advance!

[AtlantaTaxExpert]

I do not think so; you are actually a creditor to the LLC, with the profit being the payback.

[aleles]

Thanks, AtlantaTaxExpert!

Can this investment be claimed as an expense on my 1040 schedule C (I already have another business's expenses there)?

[AtlantaTaxExpert]

Only if the investment turns bad and becomes a bad debt.

[The Junoo]

Sch K-1 is provided to members of either a partnership/ MMLLC, or S-corp. Sch K-1 is also provided to beneficiaries of a trust or an estate. Sch K-1 will disclose each individual's share of the entities distributions for the year. The taxpayer who receives a Sch K-1 must file their income tax return and include income, expenses and deductions from the Sch K-1. To avoid IRS penalties, investors should ensure the partnership information included on their personal tax returns accurately reflects the amounts reported on the Sch K-1.If you invest in a partnership, at the end of the year you should receive a Sch K-1 from the partnership administrator. Although the form can seem complex, it is simply a listing of your share of the partnership's income, deductions and credits. As you would with any other year-end tax form, such as the more commonly issued Form 1099, you must transfer these amounts to your Sch E of 1040/ Form 8949/Sch D or etc and Federal Form 1040 .