I have a partnership in an organization. They give me the Schedule K-1 (1065 Form) every year. On this Form, it shows my partnership income, say $1,000, but the return of capital check I actually receive (Distributions) is only $350. When I use Turbotax to calculate the taxes every year, it always taxes based on $1,000, not $350 distribution.
I was told that when I redeem my partnership shares, the money I will get is:
For example, I purchase one share at $8,000 in 2015:
Share cost base =$8,000+ (total income listed in K1 from 2015 to the year you redeem your share)- (total return of capital check received in March 2016 to the year you redeem your share).
I am very confused because does it that mean I will have to pay the taxes again on the income when I redeem my shares? Should they report the return of capital check amount I actually receive every year as the INCOME on K-1 schedule (should not report the future income I will get when I redeem the shares on K-1 schedule)?
