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Why am I receiving schedule K-1 but no actual payment?

I am an EB-5 investor and have my permanent green card. I have also been receiving a schedule K-1 for the past two years, with $10,000 in earnings each year. However, I have never received any actual payment, yet I still have to pay taxes on this income. I am confused. Am I going to receive the money sometime in the future? When? Who should I contact to address this issue?

Answers

  • Avatar

    Salvatore Picataggio

    Immigration Attorney
    Answered on

    You need to contact the project or the regional center about that.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    You should contact the regional center and/or a tax expert for this issue. The distribution of profits/income could be governed by the agreements you signed with the regional center or by complicated tax laws.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You will need to contact your regional center project and also consult a CPA for specific guidance. Partners in a limited partnership or members in an LLC get their share of items of income, deductions, credits, etc. and may be liable for reporting income even if there is no actual distribution. This is because, under the U.S. federal tax law, a partnership or LLC does not pay taxes at the entity level (unlike a corporation) and items get passed through to the individual partners or members to report on their individual federal/state tax returns as applicable. A K-1 schedule is issued for these purposes.

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    Barbara Suri

    Immigration Attorney
    Answered on

    Including EB-5 immigrant investors, the IRS requires that all cooperative enterprises (such as a limited partnership or an LLC) provide a K-1 form to investors. The main purpose of this form is for the tax filings of both the partnership and the investor. You should contact the partnership with whom you are invested to inquire as to the whereabouts of the $20,000.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    You should review your agreement with the regional center and also reach out to them regarding the payments.

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    Charles Foster

    Immigration Attorney
    Answered on

    You should consult with your tax advisor regarding your K-1 questions. It may be that you have putative earnings without receiving the same.

  • Avatar

    Ying Lu

    Immigration Attorney
    Answered on

    You need to contact the company that issued the K-1 to address your questions.

  • Avatar

    Marko Issever

    EB-5 Broker Dealer
    Answered on

    It is possible that the subscription agreement you signed allows for the distributions to be made at a future date on a compounded or non-compounded (simple) basis. Unfortunately, even though you have not actually received the income in cash in your hand, you cannot claim that you have not earned it. This is sometimes referred to as phantom income when the income you are deemed to have received is reported on the K-1 but will never be distributed to you in cash. In other very common cases such as zero coupon bonds that pay no interest until they mature, despite the fact that they make no periodic payments until maturity, holders are typically liable for local, state and federal taxes on them on their imputed interest, or phantom income.

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    Phuong Le

    Immigration Attorney
    Answered on

    Contact the issuer/NCE, who can explain more to you. Your K-1 shows interest income earned to date but usually won't be paid out until you've fulfilled the at-risk requirements and the EB-5 loan is repaid. You'll also likely need it at the I-829 stage for the same reason.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    Contact the regional center/issuer of the K-1.

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    Howard Gould

    Securities Attorney
    Answered on

    You need to contact the operator of the project either directly or through your legal counsel. They may be using the money for capital investment but they may also be using the money in ways they shouldn't be.

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    Debbie Klis

    Securities Attorney
    Answered on

    I understand the confusion. I hope I can help. This is a function of income vs. distributions. If the company has income but which is utilized at the entity level and not distributed, the partners/members/shareholders would have to report their share of income even though no distributions yet. A schedule K-1 provides the partner (in a partnership), member (in a limited liability company) or shareholder (in a subchapter S corporation) with his or her distributive share of all ordinary income or loss, any other types of income or loss, credits and other items for inclusion with the taxpayer's federal and state income tax returns. A partnership/LLC or S corporation do not pay tax at the entity level. Instead, the partners/members/shareholders report all of the income. The partnership files a tax return with the IRS to report their income that is "passed through" to the partners/ members/shareholders, who then must report the income on their individual returns. This is in contrast to stocks, which are issued by corporations who file their own tax return and pay tax on their income Schedule K-1 should include a schedule to assist in the association of each item on Schedule K-1 with the taxpayer's individual tax return. The schedule is usually on the second page to the K-1.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Contact the project in which you are invested to find out where the money has gone.

  • Avatar

    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    You should reach out to the regional center and also to your CPA.

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