How do I get my distribution from a LLC or lmtd. partnership that my father set up or should I get out of it?

Question

Over 10 years ago my father had put my brother, sis, and I into a lmtd. partnership or LLC. This is supposed to our inheritance. When I turned 18 and did taxes, he always did my taxes even though it is signed as self-prepared.He gave me copies of a K1 form. I never got any tax returns bc he said it made too much money. However, now I am married and now my husband is suffering since we file together by not receiving any tax returns as well. There were also distributions that I never received on K1 form. He always said he would pay the taxes as well. I think some of the distributions might be due to paying the taxes, but I also feel that something fishy is going on. Lately, I feel like telling him that he either needs to give me the distributions or get me out of partnership bc it is affecting my family. I have also decided I am doing my own tax returns next year. Do I have a right to get the money now or get out? How do I go about doing this?

Over 10 years ago my father had put my brother, sis, and I into a lmtd. partnership or LLC. I have 33% in the partnership. This is supposed to our inheritance. When I turned 18 and did taxes, he always did my taxes even though it is signed as self-prepared.He gave me copies of a K1 form. I never got any tax returns bc he said it made too much money. However, now I am married and now my husband is suffering since we file together by not receiving any tax returns as well. There were also distributions that I never received on K1 form. He always said he would pay the taxes as well. I think some of the distributions might be due to paying the taxes, but I also feel that something fishy is going on. Lately, I feel like telling him that he either needs to give me the distributions or get me out of partnership bc it is affecting my family. I have also decided I am doing my own tax returns next year. Do I have a right to get the money now or get out? How do I go about doing this?

Answer 1

ninasgramma's answer sounds very reasonable to me.
As a partner in the partnership you have very right to a copy of the partnership agreement. If you can not get a copy from your father, consider contacting the state office that granted the charter for the partnership and get a copy from them.
You did not state what state you lived in so I can not give you the specific agency to contact.
Sounds like the taxes he prepared for you was using a Turbo-Tax program, that automatically prints self-prepared on it.
It is rather late at this point, but all you needed to do was cross out the words. Because he was not a paid preparer, he is not required to sign the return.
It sounds like it is not tax returns that you never receive, but a tax refund. It also sounds like the LLP may be an investment LLP inwhich there are capital gains, dividends, and etc. that are reinvested into the partnership. And of course you still have to claim these on your tax return.
I agree that it depends on the LLP formation agreement on your rights to get a distribution from the LLP and conditions on the sale of your interest, and the agreement will also tell you your rights as a limited partner.
Consider talking to your father and tell him, that you are going to do your tax return without the K1 statement and then with the K1 statement, even though you will file the return with the K1 statement(as required by law). And you would like a reasonable portion of difference for your family now, it is sweet of him to want to give you an inhertiance, but the LLP is making your life unreasonably uncomfortable.
I wish you the best.

Answer 2

You do not indicate what percentage your partner interest is. In a family limited partnership, you may have a 1% interest. The family limited partnership is an estate planning tool, and your father has indicated this. It may be his intention to retain control of the assets of the partnership until his death, after which you will get your inheritance.

You may or may not have the right to withdraw from the partnership on your own terms. This depends on the partnership agreement. You can ask your father about the partnership agreement, and tell him that you will need your K-1 for your taxes as you will be doing them yourself.

Even though there may be a lot of assets in the partnership, this does not mean that you can expect money coming to you. It depends on your partnership participation level and the partnership agreement.

I would recommend that you find out more about the terms of the partnership by meeting with your father in a nonconfrontational manner. He is clearly asserting a lot of control over his money and that may be his personality. But he is not necessarily doing anything fishy and it would not be in your best interest to indicate that you think that he is.

Answer 3

Tell your dad that incest is illegal. He's screwing you over big time! If he wants to leave you an inheritance he should set up a trust and pay the taxes himself.

You may need to get an attorney to get your name off of the LLC unless your father is going to start cutting you a check for the income listed on the K-1. What he's doing is palming off a chunk of the income on you and your siblings and taking the profits for himself.

If he's not giving you enough in cash to at least cover your tax liability for the income on the K-1s then something is fishy.

Answer 4

I agree this does sound fishy. But it might not be. You know your Dad better than I do.

I suggest you engage an attorney and/or an accountant as needed. As a partner you have a right to inspect the partnership's books & records. Of course, you may not make much of them but an accountant will, and can then tell you if it's kosher or not.

If Dad is cheating you, you absolutely want to involve an attorney to maximize your recovery.