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Question
What is the S corps general ledger entry when it receives a distribution from an LLC of which it is a member? Debit the S corps bank account. And then credit what account? Thanks in advance for your answer.
Answer

Great question! If the S Corp has interest in an LLC, that investment should be recorded as a long-term asset on the S Corp’s balance sheet, i.e. “Investment in ABC LLC.”

Any distributions, contributions, or share of profits/losses should be run through that account. So to answer your question, you would debit cash and credit your long-term asset account.

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Sarah York, EA

Sarah is a staff writer at Keeper Tax and has her Enrolled Agent license with the IRS. Her work has been featured in Business Insider, Money Under 30, Best Life, GOBankingRates, and Shopify. She has nearly a decade of public accounting experience, and has worked with clients in a wide range of industries, including oil and gas, manufacturing, real estate, wholesale and retail, finance, and ecommerce. Sarah has extensive experience offering strategic tax planning at the state and federal level. During her time in industry, she handled tax returns for C Corps, S corps, partnerships, nonprofits, and sole proprietorships. Sarah is a member of the National Association of Enrolled Agents (NAEA) and maintains her continuing education requirements by completing over 30 hours of tax training every year. In her spare time, she is a devoted cat mom and enjoys hiking, baking, and overwatering her houseplants.

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