How do I deduct the loss of a K1 partnership? Final K1 issued - dissolved. My Ending Capital Account is $7,416 - but it's really zero.

[PatriciaV · Accepted solution]

Yes, to report a dissolved partnership, check the box for "Disposed of a portion of my interest" on the page "Describe the Partnership." If you don't see this page during the interview, go back to the beginning to Update this K-1. Then answer "No" on the page "Review your information." This allows to you enter your zero ending basis and check the box that you disposed of the investment.

Indicate that you sold your partnership interest (even if you received nothing). Follow the prompts to report the purchase date. Use 12/31 as the Sale Date, unless you know the date the partnership dissolved. On the page "Enter Sale Information," enter zero for Sale Price and your remaining Adjusted Basis for Partnership Basis. You should see a Loss on this transaction equal to your adjusted basis.

Continue through the section to enter any income or expense from Schedule K-1, and any carryovers you may have from prior years.

The result of this transaction is reported on Form 8949 as the Sale of Capital Assets.

[u711]

I sold all my units in the MLP which I owned on Dec. 4, 2019.  On January 16th, 2019, the MLP reorganized as a S corporation.  The company fixed the price of the new S shares at $10.69 and granted 1.15 shares in the S corp for every unit held in the MLP for $4.84 per share on December 4, 2020.  I downloaded a projected Gain/Loss calculator which the company provided.  It had four columns: 1) Cumulative Adjustments, 2) Total Gain/Loss, 3) Ordinary Gain, 4) Capital Gain/Loss and 5) AMT adjustments.  

The value for 1) was -282,965, 2) was 181,521, 3) was 239,972, 4) was -58,421 and 5) was -7,000.

Given all of the above figures for purchasing the original units and the figures provided in the Gain/Loss Calculator...what is someone's best guess what my IRS income tax liability will be come April, 2020.

Enquiring minds and a sweating taxpayer would like to get an idea of what the tax burden, I will face will be.