I'm Colorado based and my business partner and I are in a California based LLC.

My question is in regards to LLC's and K-1's in general.
I'll set up the situation.

2 Partners own 51 and 49% of the company.
Let's say we start the year with $0 and make $10000. Let's also, for simplicity, say that there are no expenses (or the 10k is after expenses).

At the end of the year, the $10k profit is still in our corporate bank account and neither of us have received any distributions or payments during the year as we are trying to grow this business.

I'll get a K-1 statement for $4900 (49% of the profits).
When I plug this into my personal taxes (Turbo Tax) I owe taxes on the $4900!!

This seems bizarre to me as I never received any $$.

What are we doing wrong?!?

There's no way Steve Jobs, who owned ~1% of Apple got a K-1 statement for 1% of Apple's profits.

I ask because I'm being offered the ability to become a 5% owner and do absolutely nothing. This sounds great, but if I'm going to get a K-1 every year and have to pay tax, it's not so nice. I understand I get to take the loses also, but we hope to not have those

I also understand the company could distribute it's profits at the end of the year and effectively get to $0 but then you don't have needed capital heading into the next year.

I hope this makes some sense... I've asked around to some tax folks and they have no idea.

Thanks for you time,
Chris