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Accounting for Partnership Distributions (including Tax)

Does accrual of partner's (LLC-member) min tax distributions (not guaranteed payments like salaries) make sense and is a better alternative in some specific cases to a common practice of recording distributions as it occurs? I.e. if partners received a distribution in January to pay off tax liability due for estimated taxes of a preceding year - would you account for this distribution in tax/cash & GAAP books in a year a distribution was processed or in a year distribution used as a basis for calculation purposes (i.e. previous year accrual)? Distribution does not affect accrued income/expenses and only affects capital balances. I can't seem to find any reasonable benefit of creating an accrual in December for the distribution processed in January. Any feedback, clarification or specific case example is truly appreciated! Thank you in advance.

Answers

Anonymous
(controller) |

We accrue for our LLC Its we treat tax distribtuions as a distribution declared & payable as of the end of each quarter.

Anonymous
(Controller/Finance Manager) |

Thank you! Is there an advantage of accruing distributions vs recording only when distributed? For tax/GAAP or simply management reporting? Is there a reason why your entity prefers to do it this way? My only issue is that capital accounts balance decreases when accrual is made before distribution is processed.

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