How to Determine Gain or Loss and Sales Info from K1 with RSU Liquidation

[dyyyyy]

Hi! I had some vested RSU in the past three years from my old employer (not public). The company was acquired last year and there was a liquidation event that automatically cashed out all my vested RSU. Thus I received a Schedule K-1 for the liquidation event.

When I was doing my tax in Turbotax, I selected 'complete disposition' from 'Describe Partnership Disposal' question (as shown below), then it asks me the Sales Data (Purchase Data and Sale Date) and Gain or Loss. My questions are:

1. I don't really have a 'Purchase Date' as the RSUs were granted to me and vested over time. If I input 'Various' in 'Purchase Date', later calculation in Gain or Loss treated all my gain as short-term capital gain (which is not the case as I see s/t and l/t on my K1 box 8 and 9);

2. Regarding Gain or Loss info, is Sale Price the total Cash Distribution (K-1 19A)? And how to determine the Partnership Basis (maybe Cash Distribution - S/T capital gain - L/T capital gain)? Or seems like if I select 'Disposition was not via a sale', this whole section will not show up... And I am able to input all the info required in the later sections (different K-1 box values), which seems to generate correct numbers for capital gains in 1040. Not sure whether my case is technically considered as a 'sale'.

Would really appreciate it if anyone could help! Thank you in advance!

[DaveF1006 · Accepted solution]

It depends. I think you are overthinking this because from what I can tell, you weren't a partner but an employee of the partnership. I would skip putting any information regarding the liquidation of the partnership or the sale information unless you are a general or limited partner. In your case, this is technically not a sale so leave this section blank. Make sure when you are in the page that says Describe this partnership, choose none of the above.  

The main purpose of this K1 is that you report your vested RSU sales correctly. If these show up correctly as capital gains in your 1040, then it sounds like you reported this correctly.

[dyyyyy]

Thank you so much Dave! This makes a lot of sense. I also played around with it -- seems like as long as I input the net gain/loss from K1 correctly, it will flow into Form 1040.