We Prepare Tax Returns!

We prepare most type of tax returns:


S Corporation.

C Corporation.




Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

We short sold our home in 2014 and were concerned with the repercussions from the cancelled debt. We did a lot of research on the internet and were able to find Gary.  He provided a free consultation and let us know that we should be do.  Due to his expertise, we went from thinking that we would owe a significant amount of money to actually receiving a nice refund.

We would recommend Gary to anyone who finds themselves in a similar situation.  He’s very knowledgeable on the process and explains everything with you once he’s completed your tax forms.

Adam and Robin McNany

Free Consult

Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

Pay Your CPA

Enter $ Below

Other Amount:

Your Email Address :

LLC CPA gives an example of Partnership Distributions | Form 1065

LLCs can elect how they’re taxed. In this post, the LLC chooses to be taxed as a Partnership and files Form 1065 with the IRS. The following example illustrates a common trap for LLC Members; the IRS treats a reduction in a Member’s share of LLC debt as a cash distribution.

The following example is not comprehensive. And the IRS devotes lots of tax code to Partnership distributions. You can’t rely on this post as a reasonable basis for tax planning or Form 1065 preparation.

Let’s assume Member Mark holds a 25% interest in NC CPA, LLC, and has a tax basis of $25,000. The LLC distributes $25,000 to Mark in a non-liquidating distribution. After the distribution, Mark maintains a 15% interest in the LLC. Most folks would correctly figure that Mark has no tax consequences based on this simple fact pattern.

But NC CPA, LLC has $200,000 of debt. Before the non-liquidating distribution, Mark’s share of that liability is $50,000 (25% x $200,000). But afterwards, Mark’s share of the debt is $30,000 (15% x $200,000) . The IRS considers this $20,000 decrease in debt as a cash distribution to Mark. So, while the $25,000 of cash had no immediate tax consequences to Mark, the extra $20,000 of reduced liability is considered a Capital Gain.

I’m a LLC CPA with a virtual office to serve clients beyond my Wilmington NC geographical base. If your LLC doesn’t already have a CPA, or you like what you read, consider calling (910) 399-2705 for a free phone consult.


1 comment to LLC CPA gives an example of Partnership Distributions | Form 1065

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>