I own a payday loan company in Missouri which is licensed as a LLC with two partners. I am trying to do the taxes myself, but was just looking for answers to a couple of things. The big question is where do I put money I have out as loans as an expense?

The monies that you have lent the LLC Partnership could be created as either a Capital Contribution or a Loan to the Partnership. The expenses will of course be reported under the business deductions in the appropriate categories.

The choice to treat is a an additional capital contribution or loan to the partnership will depend on your existing basis in the partnership.

If you sustain a loss and have zero basis in the partnership, I would strongly suggest that you treat the monies invested into the LLC as an additional capital contribution to enable you to provide a basis to deduct the losses.

If you have sufficient basis in the LLC, then it might be prudent to record your monies invested as a loan from the Partner. I would also recommend that you establish a proper loan document specifying an interest rate and repayment terms to comply with the IRS requirements regarding partner loans to a partnerships.

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