@Canonical Your best bet would be to review the actual instructions on PTPs (page 14 at this link: https://www.irs.gov/pub/irs-pdf/i8582.pdf). It discusses the special rules around passive income and losses, the exceptions for PTPs, and exactly what types of passive income can be used to offset a passive loss. Specifically, the rules around PTPs are much more restrictive than general recognition rules.
Its also worth noting that the formula you got from the K-1 provider had nothing to do with how or when to report different items: it was strictly how they calculate the change in basis. The partnership, and the company issuing the K-1, have no idea how much tax you should pay, or when.
**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!
