Dissolving 7 member LLC

[David]

This is the first multi-member LLC dissolution for me.

The LLC has 7 members. Six members have zero basis and negative capital balances. Basically, one of the members has been carrying the other members.

Where in the ATX program do I close out the member accounts and book gains and losses? I don't see where that would be on the K-1 input. Is the gain/loss from dissolution reported on the K-1 or is it up to each LLC member to report this on their personal tax return?

The person who records the QB information for the LLC did not make closing entries. Is it as simple as zeroing out the balance sheet accounts and allocating to each member account their portion of assets and liabilities?

Thanks for your help.

[OldJack]

Is it as simple as zeroing out the balance sheet accounts and allocating to each member account their portion of assets and liabilities?

Probably, as the balance sheet should be zero after liquidating distribution and the K-1 only show ending partner equity. Remember that the negative balance members probably have deducted more than their tax basis and the negative amount is therefore taxable income to them as recapture ordinary income on 1040 Sch-E, page 2. The positive account members have a deduction as either capital gain or business bad debt.

[David]

Thanks for your response.

Do I calculate the gain/loss for each member? Where is this entered on the K-1?

BTW the members with negative capital and zero basis never took losses since they had no basis. Would the negative capital still be ordinary income to the members? Where is this reported on the K-1?