Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Your taxes, your way. Get expert help or do it yourself. >> Get started
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
vhmorcos
New Member

I have a large gain on my K1 form --- net 1231 gain; is all this gain taxable?

I had only a partial distribution this year
1 Best answer

Accepted Solutions
ChristinaS
New Member

I have a large gain on my K1 form --- net 1231 gain; is all this gain taxable?

Yes. Distributions aren't particularly relevant. When you get a K1 from a pass-through entity, its income/ loss is passed through to your personal 1040. Distributions decrease your overall basis in the investment, but don't factor into the amount of income/ loss which is passed through. If a K1 reported $100k in Box 1, for instance, you would report $100k in income even if you received $0 in distributions. Conversely, if you received $100k in distributions in a year with $0 in income, the distribution would still not be taxed (unless distribution exceeded basis, which is not common).

A large net Section 1231 gain would be taxed in the current year as a long term capital gain on Schedule D.

View solution in original post

1 Reply
ChristinaS
New Member

I have a large gain on my K1 form --- net 1231 gain; is all this gain taxable?

Yes. Distributions aren't particularly relevant. When you get a K1 from a pass-through entity, its income/ loss is passed through to your personal 1040. Distributions decrease your overall basis in the investment, but don't factor into the amount of income/ loss which is passed through. If a K1 reported $100k in Box 1, for instance, you would report $100k in income even if you received $0 in distributions. Conversely, if you received $100k in distributions in a year with $0 in income, the distribution would still not be taxed (unless distribution exceeded basis, which is not common).

A large net Section 1231 gain would be taxed in the current year as a long term capital gain on Schedule D.

About Community

Learn about taxes, budgeting, saving, borrowing, reducing debt, investing, and planning for retirement.

3.48m
Members

2.61m
Discussions

Manage cookies
v