Investment in LLC with Note

[EricS-AMIC]

Hello,

Curious if others have had similar investments, but we have made capital contributions into an LLC that has a small equity portion and a larger revolving note. We have typically recorded the entire interest in the LLC on Schedule BA.

Upon receiving the k-1's, we noticed the note is handled as a recourse liability and does not count towards the ending capital account basis (prepared on GAAP basis for k-1 purposes).

Wondering if statutory addresses this or if we should continue to show the entire interest in the LLC on Schedule BA or if the revolving note should be broken out (either on BA or Schedule D?).

Appreciate any insight,
Eric

[Lisa]

Eric,
We, at Sovos Booke, have not encountered the investment situation you describe in your question, but encourage others using the Forum to respond if their Company has a similar type of investment.

Thanks

Lisa Mullen
Regulatory Education Director at Sovos