USA 60/40 partnership LLC with an imbalance in contributions

[pcain72]

Hello,
My name is Pete and I live in Denver, CO. Thank you for reading this. I am not an accountant, I am not a tax pro by any measure. I really should have let an accountant help me with this; I have probably shot myself in the foot. I'm stuck and looking for help. My wife has a company where she and her cousin are 60/40 owners of rental real estate. It's been in business since 2014, and doing ok. I had been taking care of the taxes. Every year, there are some expenses that are paid by one of the owners (usually my wife), and before the end of the year, the company reimburses her. So, that just gets accounted as an expense, and categorized accordingly (usually for repairs, but sometimes for miles driven or insurance). In 2021, the company incurred expenses it did not reimburse, because it didn't have the cash (we had a rotten tenant for awhile there and cash flow was low, still do, long story). About $2K worth. So, going into 2022, the company owes my wife (the 60% partner) that money. I have no idea how to account for that extra $2K. There's no cash to pay yet, but there will be soon, hopefully. But the fact remains, the 60% partner put in money that didn't get paid back. Can anyone tell me how to account for that money? Thank you so much!

 

[BIG E]

Is there a partnership agreement that stipulates that she's entitled to get reimbursed for these types of expenses, and that
she is permitted to take a personal tax deduction for unreimbursed expenses? If yes, then on the Schedule E where the
partnership income/loss items are reported, there is an opportunity to claim Unreimbursed Partnership Expenses (UPE)
to reduce whatever income (or increase loss) of partnership items reported on Form K-1.

 

[pcain72]

Is there a partnership agreement that stipulates that she's entitled to get reimbursed for these types of expenses, and that
she is permitted to take a personal tax deduction for unreimbursed expenses? If yes, then on the Schedule E where the
partnership income/loss items are reported, there is an opportunity to claim Unreimbursed Partnership Expenses (UPE)
to reduce whatever income (or increase loss) of partnership items reported on Form K-1.

That’s perfect! Thank you so much