Do i have to report a partnership distribution on the Form 1065 K1 if it is returning a capital contribution?

[julebert]

I am filing the final partnership (LLC) Form 1065. I am distributing remaining cash assets to the partners. Do I have to record a distribution on a partner's K1 if it is simply returning their capital contribution to the partnership?

[Rick19744 · Accepted solution]

The final K-1 should reflect all activity up to and including all liquidating distributions.

Make sure that the 1065 and K-1's are all marked as final.

Each partner should be maintaining a basis schedule of their investment.  Once this is updated for the applicable lines on the K-1, the partner is then able to determine their overall gain or loss.  This will then be reported on their 1040 Schedule D and form 8949.

[jgb]

If the partner has no gain/loss but is just receiving exactly his remaining capital back, that amount goes in k1 box 19 as a distribution?

[Rick19744]

Double post.

[YQ]

I am a general partner of a partnership LLC and getting K1 from this partnership every year. For first few years, we have losses but no gain.  In 2018,  the partnership sold some assets so we have gain on box 10 (net section 1231 gain). The 2018 K1 is not a final K1. I believe the gain on box 10 is returned capital.  I don't know if I answered some questions wrong when using Turbotax, this gain become allowed loss from all passive activities. On schedule 1 (Form 1040) line 17, it shows negative numbers there which causing my income become negative. I can use this gain to offset some of the unallowed losses from past, but I do not need negative income.  Anyone know which question I answered wrong and how to fix the problem? Thanks.