Q&A with the Pennsylvania Department of Revenue

Would a distribution from an LLC to a corporate member be included in the corporate member’s net income if it constituted a “return of capital"?

Jun 23, 2010
A distribution to a member, up to the amount of the member’s share of earnings for that period plus the member‘s share of accumulated earnings from prior periods, is a distribution of earnings and included in book income. Any distribution above that amount is a return of capital excluded from book income. If the distribution is from a properly documented sale of an ownership interest, the distribution is a return of capital.

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