VIDEO: Capital Accounts Explained: Why Your K-1 Balance Confuses Investors

https://youtube.com/watch?v=oSu8kPdnw1Y

What are capital accounts in an LLC? Attorney Gene Trowbridge explains how K-1s work, what increases and decreases your capital account, and why investors often misunderstand their year-end balance.

⏱️ TIMESTAMPS:
0:00 – Introduction
0:40 – Why capital accounts matter for investors
1:40 – How capital accounts track your investment
2:20 – What increases and decreases your capital account
3:11 – Real example: 10% investor with $100K investment
4:30 – Cash distributions vs. taxable loss allocations
6:22 – Why investors ask “Where did my $$$$$ go?”
7:49 – Cash distribution vs. taxable income explained
8:18 – Five-year example: From investment to property sale
9:58 – The adjusting entry that brings you back to zero
10:59 – Manager capital accounts and passive loss rules
12:08 – How to get Gene’s book free

In this video you’ll learn:
• Why your K-1 capital account balance differs from what you invested
• How cash distributions reduce your capital account
• Why taxable losses decrease your account (even when you receive cash)
• The zero-to-zero principle: How capital accounts always balance out
• Real examples with actual numbers you can follow

📞 CONTACT US:
Website: https://www.tnllp.com
Schedule a Consultation: talk.tnllp.com
Free Book: book.tnllp.com

📺 RELATED VIDEOS:
• LP vs LLC: Why the Difference Matters: https://youtu.be/r5AydBo8-WQ?si=1CJArVDe7sSoFjUZ
• 1031 Exchanges Explained: https://youtu.be/NVpYvkUFDp0?si=jiXieNASxun0IjVw

Gene Trowbridge is a CCIM-certified real estate attorney with 50+ years of experience in syndication. Trowbridge Nieh LLP has helped clients complete over 1,000 offerings totaling $8+ billion in raised capital.

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