k-1 draft

[sur90013]

I received a Draft K-1 from a company that I am a limited partner in.  Box 19C has an amount of $127,201.  This amount was distributed to me 8/4/2024.

The description is Shares of Sedgwick Claims Management Services, Inc. with a FMV of $127,201 and a TAX BASIS of $127,201.

Box L Partner’s Capital Account Analysis

Beginning capital account . . . $444,470
Capital contributed during the year . . $0.00
Current year net income (loss) . . . $(464)
Other increase (decrease) (attach explanation) $(127,201)
Withdrawals and distributions . . . $0.00
Ending capital account . . . . $316,805

I also received a payment in October for $888,940 which is not reported on the K-1

The beginning balance was a gift I received in March 2023.

I am completely confused on how to enter all this into Turbo Tax so that I file correctly and pay the appropriate taxes.

All assistance is greatly appreciated.

[ThomasM125]

The money you received you need to report as the proceeds of an investment sale in TurboTax. The cost basis that you report associated with that will be your cost basis in the partnership, up to the amount received, assuming it is not a complete liquidation of your interest. I assume it is not as there is still an amount for your ending capital account.

You cost basis would be your original basis plus income from the partnership that you included on your personal tax return, less losses that your included, plus additional money you contributed if any, less money's distributed to you if any before the current year. You would  also add the amount of any partnership loans you personally guaranteed.

Your beginning basis for a gift would be the donor's basis when you took possession of it, unless the property was sold at a loss, in which case it would be the lower of the donor's basis or the fair market value when you took possession of it.

You enter investment sales in the Wages and Income section of TurboTax, then Investments Sales, then Stocks, cryptocurrency, Mutual Funds, Bonds, etc... Skip the section where it asks if you want to upload your tax documents. Choose Stock, Bonds, Mutual Funds as the type of investment you want to enter. You'll come to a screen where you can enter in your sales proceeds and cost basis.

For the current year net income of ($464) you would make a partnership K-1 entry in TurboTax and enter the amount in box 1. You do that in the Wages and Income section, then Business Investment and Estate/Trust income, then Schedule K-1: