Our company paid the taxes for its members. Should this be booked against their equity or can we take this as an expense?
Taking it as an expense can help us with our taxable position. I have always worked in a corp and never dealth with an LLC. Any insight would be appreciated.
It isn't an expense for Federal
Best of luck! I am not a
When you say the LLC "paid the taxes for its members", I assume you mean Federal or State income taxes. If so, these taxes are a "personal" expense of the members - not an LLC entity expense. If the LLC paid these taxes on behalf of its members, then it seems to me that you have an equity distribution to record.
This should be charged against the members equity accounts. It is not an entity expense. We have the same situation.
Payment of federal taxes by an LLC on behalf of its members is a distribution - effectively the same as if cash were distributed and used to pay the liabilities by the members themselves.
