antoniot1
New Member

K1 Hedge Fund investment

Hello,

 

I am really struggling to see how I should categorize my K1 income and deductions on my tax return for being an LP in an investment fund (I work for the GP that manages the LP).

 

I have three items on the K-1 I need help/clarifications:

(1) Income under line 11, code A, has four different items:

     a) IRC Sec 988 gain/loss

     b) Other income/loss

     c) Subpart F Income

     d) Swap income/loss

 

(2) Income under line 11, code I, has one item:

     a) Other income

 

(3) Deductions under line 13, code W

     a) Portfolio deductions

 

Some deductions under line 13, code W as "Other portfolio deductions"

 

Question 1: This is an investment (non trader) fund. I assume I should enter "No" for material participation. Is that correct?

Question 2: For 11 Code A, should I check the box that says "other portfolio income(loss) to be reported in schedule E, page 2"?

Question 3: For 11 Code I, should I check the box that says "other non-passive portfolio income(loss) to be reported in schedule E, page 2"? That seems wrong as it is passive. However, if I enter it in "another descriptive item", it doesn't seem to feed through to the 1040 and end up being an untaxed income

Question 4: For 13 Code W, if I put it under "I have another description item", this also does not feed through to the 1040 eventually, so end up with no deduction. However, that would contradict the earlier assumptions for Question 2&3 in which I enter these into Schedule E.

 

 

Any help would be much appreciated. Thank you!