Mike appreciate your detailed message.
> the sale gain should already be on the k-1 lines 9a 9c and maybe line 10. to enter the sale info in the disposal section would then result in you double reporting the gain on sale.
* That’s correct. I have amounts in the sections for Part III,
- 9c : Unrecaptured section 1250 gain
- 10 : Net section 1231 gain
- 2 (few hundreds loss)
> if the k-1 is marked final your ending capital in part II section L would normally be zero.
* Yes that's correct the K1 is marked final. The beginning year has some capital (Say $C) but ending capital is 0. In the same section there is "Current year net income" (Say $NI) and also some measly loss (Say $Loss) and a withdrawal/distribution amount ($DIST)
So Ending capital is $C+$NI-$Loss-$DIST = $0
> Current Year Net Income (Loss) should be the net of the various income and expense lines in Part III (FYI 9a includes 9c)
* There are gain amounts in 9c & 10 as mentioned above.
> Withdrawals and Distributions should normally match 19a. It's unlikely there is anything for 19b or c. the net of these is your ending tax basis which if it's a final K-1 should be zero the same as shown for Ending Capital.
* Correct, only section 19A has a distribution amount and that matches the withdrawal/distribution in section L.
Since its the final K1 and tax basis is 0 (based on your explanation and since section L ending capital account shows 0), what I intend to do is,
1. Fill in the Sale information as follows,
Sale Price = 0
Selling Expense = 0
Partnership basis = 0
Ordinary gain = 0 (There is no ordinary gain listed in Schedule K1)
1250 Gain = $X (Since I have 1250 Gain in Schedule K1 section Part III - 9c
And fill in the Schedule K1 details as per the form.
You think this makes sense?
Since you mentioned entering sale info in the disposal section would result in double reporting the gain, I tried to just experiment with it and entered sale information. That certainly resulted in doubling the gain in Form 8582. Nasty!!! I reverted back to entering sale info as per your recommendation and now form 8582 shows the right gain amount.
