@Canonical Here's an example that may help: let's say you own the PTP for 5 years. Each year, if you enter the K-1 information into TT, following all the instructions, your taxes will be filed and paid properly:
- Any source of income, like dividends or interest, will be reported on the appropriate form and you'll pay taxes.
- Deductions that you can be take will be taken
- Losses will be recognized when appropriate, and otherwise suspended.
- Note that the information you enter regarding your capital account (Part II, Section L of the K-1) is ignored by TT. They don't use it. Its just for your records.
- Further note: if your capital account drops below 0, you have to uncheck the "Capital at risk" box in the interview, and things get more complicated.
In year 5, when you sell, two things will happen:
- TT will release any suspended losses, so you get to take them in that year
- The K-1 will include a new form -- a "Sales Schedule" -- which will tell you the basis you should use for your sale.
Hope that helps.
**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!
