Trying to understand K1

[Rick19744]

Based on the facts above and assuming no additional 2018 K-1 allocation:
1) Since you have a complete disposition, you would be able to deduct all suspended losses.
2) Also based on the basis figure noted above, the ending capital (also your tax basis) of $2,315 would be deducted as a LT capital loss.  This would be reported on the applicable form 8949 and Sch D.

[mainhoon]

So Rick:
(1) About all suspended losses.. what is that amount then for 2018. Would that be -1656 till 2016 (as you calculated above) plus the 365 in 2017 + whatever K1 number in 2018?
(2) The ending capital of 2315 is using data till 2017. So you are assuming that 2018 K1 will not change the ending capital.. But then do I deduct this amount as a LT capital loss PLUS the one in (1)?
Appreciate your help.

[Rick19744]

Response:
1) Difficult to say based on an earlier post of what the accountant was doing incorrectly.
2) If the 2017 return is prepared correctly, your suspended losses would be reduced by the $365 of 2017 income.  So based on the facts it would be $1,656 minus $365 = $1,291.
3) Tying to do a hypothetical for 2018 involves too many assumptions.  Just follow the same analysis for 2018 as has been reflected in these comments.
4) In general, your tax basis will be adjusted by any 2018 activity.  You will most likely have an ending tax basis amount and this will be a LT capital loss.

[mainhoon]

ok just to add for (1), the accountant was mixing up the 365 K1 number with ongoing real estate rental losses that I have. So say my rental loss at end of 2017 was -10000, what he did was to use 365 to reach a net new loss of -9635, which I think is incorrect to do. Can't mix up these 2 types of passive #s.. Right?

[mainhoon]

Rick/Nexchap- So another simple query.. Per (2) above where the suspended losses would be 1291 after addng 365, my question then is do I pay taxes on the 365 or just carry the losses forward? In other words does 365 appear on my 1040 somewhere and add up to AGI or just is buried in the loss carry forward?

I think I don't pay any taxes on 365, I just carry forward the loss. Only on 2018 return I do the taxes - since it is all disposed now.. as a LT capital loss. RIght?

[Rick19744]

So here is some guidance for you:

• The MLP is a pass-through entity and allocates all the income, loss, gains and losses out to the investors.  You need to report the K-1 activity on your tax return.  Once you indicate in TT that you received a K-1 from a partnership, there will be questions that guide you through the input process.
• Partnerships generally pass out distributions to cover any tax impact, however, if it is nominal that may not occur during the tax year.
• You need to start a basis schedule of your investment in the partnership.  This begins with the amount you paid for the stock and will now be updated each year for the applicable lines on the K-1.  This basis schedule provides the information as to if you are able to take losses and more importantly will determine the overall gain or loss upon disposition.

[mainhoon]

Thanks for the answer. So in my case, this entity is in bankruptcy proceedings and it is not giving out any distributions. The stock is worth 0 too. So I am wondering now what is that Box 1 in K1 giving me? Is it only at sale I get something? I don't follow what Box 1 income means if I don't see it in my bank account.