Investment: LLC K-1 is negative

This is a legacy plan with a set of long time partners.

One partner has an LLC investment that pays out dividends, but the K-1 has shown a negative balance for two years now, with the most recent year even more negative. Not sure how to treat this for calculation of total assets in the plan?

Ask them for the fair market value of the investment?

Whether a member’s K-1 from a limited-liability company reports income items, loss items, or some of each kind doesn’t necessarily tell you the fair-market value of the member’s LLC interests.

If the LLC is taxed as a partnership, remember that different members of a limited-liability company might have different interests. One member might have only a guaranteed-payment right. Another member might have an income interest but no loss interest. Yet another member might bear loss interests, including those not borne by other members.

Even if the whole company has a year’s loss or several years’ losses, that by itself does not mean that a particular member’s LLC interests lack value, or even that capital interests lack value.

If an asset is not regularly traded on an exchange, doesn’t a third-party administrator rely on what the plan’s administrator says is the value?