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how to record 2 separate partner draws from a rental

sailingmagnum

one rental property, 2 partners. every quarter 5k to each. since we manage the property, our draw is a simple transfer from the rental checking to our personal checking and i created a tag for partner draw A. But for the other partner, its a payment to an external account. So do i create a category called owner draw, or create a liability account. i am confused since i came from quickbooks with the ability to create a general journal, thanks

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NotACPA

How to handle this depends upon what your need is.

Do you just want to reduce the balance in the rental account, or do you need to record (say, for tax purposes), the amount paid to Partner B?

And, neither "Owner Draw", which is a type of Liability to the property, nor another liability would be appropriate. Either would leave the funds in Q as something that the Rental still owes, even though it's been paid.

If you just want to reduce the balance in the account, you can record a TRANSFER back into the same account by using the account name, enclosed in square brackets (e.g. [Account name]) which will remove funds from the account but not post them elsewhere.

OR, you could create an Expense category and post the transaction to that.

sailingmagnum

i need to keep track of the draws for each partner. So for example, when I take the draw for us( partner 1), because, its a simple transfer from the rental property account to our personal checking, its a straight transfer. so i created 2 tags. partner 1 draw ) partner 2 draw. That works fine for partner 1 because its a simple transfer.
But for the other partner, since its a payment out to an external account, that I don't have in my Quicken, what do i put in the category line? I created a liability account for Partner Draw, and assigned it to that, and then tagged it with Partner 2 draw. But then the only way to track both draws is by generating a report by tags, but when i do, I think the liability account creation is messing up the numbers there. because its just an owner draw from the partnership, its not an expense. so i don't want it showing up in a P&L account.

NotACPA

Create an Expense category, for the payments to Partner B, and associate an appropriate Tax Line to it.

It's an Expense to the rental, and a Liability would show the money as still being owed … not as being Paid.

It's an Expense because it reduces the value of the Rental … and if you don't want it showing in a report, just don't include that Expense category.

sailingmagnum

what is the appropriate tax line associated with it?
I see now that I shouldn't show it as a liability account, but could i create an asset account called Partner draw? thanks

sailingmagnum

or could i create a dummy offline account for partner 2 draw and just use the partner 2 tag, to still be able to track?

NotACPA

While I'm a retired bank auditor, I'm not a tax professional … so I can't answer your tax question. And, since I'm not a tax professional, you shouldn't rely upon tax advice on here from me or anyone else.

And, what tax lines are available for your use is partially dependent upon which Q product you're using. Have you previously filed a tax return for the partnership?

In accounting, there's 4 broad classifications of things: Income, Expense, Asset or Liability.

From the perspective of the rental itself, Expense is the only one that fits.
Money isn't coming into the Partnership (Income),
it's not something the Partnership owns (Asset),
it's not something the Partnership owes (Liability, it's already paid),
only Expense is left.

NotACPA

An Account, in Q, would have to be either an Asset or Liability … so still no.