Thanks Ira. So if a person withdraws more than his basis that amount is tentatively taxable but later in that year the person contributes more than the excess than extra is not taxable anymore? When matters is the net at the end of the year.
The reason for giving them a second withdrawal report when the tax return is prepared is that sometimes the withdrawal report changes between the withdrawal date and the end of the year. This happens when a transaction dated prior to the withdrawal is entered into the data after the initial withdrawal is processed (full withdrawal). With a partial withdrawal, subsequent contributions from the member can affect the amount of the partial withdrawal that is taxable.
Ira, I give the person withdrawing a withdrawal report when they do the withdrawal but not when I do the taxes. Why give them another withdrawal report when I do the taxes? The K-1 is what tells them what is taxable income.
If you didn't do so already, you must create a withdrawal report for the member. When you prepare your 2024 tax return, give her a copy of the report with her K-1. The withdrawal report may indicate that some/all of the withdrawal is taxable. It all depends on how much she withdrew relative to her tax basis in the club.
I appreciate this situation and just want to make certain my club did this correctly. A member asked for an amount be taken out of her share. It was a large amount. We had enough in cash to pay her, a check was written from the broker. Will we have to do anything else before tax time 2025?
Thanks Ira. So if a person withdraws more than his basis that amount is tentatively taxable but later in that year the person contributes more than the excess than extra is not taxable anymore? When matters is the net at the end of the year.
The reason for giving them a second withdrawal report when the tax return is prepared is that sometimes the withdrawal report changes between the withdrawal date and the end of the year. This happens when a transaction dated prior to the withdrawal is entered into the data after the initial withdrawal is processed (full withdrawal). With a partial withdrawal, subsequent contributions from the member can affect the amount of the partial withdrawal that is taxable.
Ira, I give the person withdrawing a withdrawal report when they do the withdrawal but not when I do the taxes. Why give them another withdrawal report when I do the taxes? The K-1 is what tells them what is taxable income.
If you didn't do so already, you must create a withdrawal report for the member. When you prepare your 2024 tax return, give her a copy of the report with her K-1. The withdrawal report may indicate that some/all of the withdrawal is taxable. It all depends on how much she withdrew relative to her tax basis in the club.
I appreciate this situation and just want to make certain my club did this correctly. A member asked for an amount be taken out of her share. It was a large amount. We had enough in cash to pay her, a check was written from the broker. Will we have to do anything else before tax time 2025?