Hello - here is the situation:
I have been an LP in real estate project for 5 years. Every year I was getting ordinary income losses which I have been making as carryovers to utilize them at project completion. In 2021 - for some reason, I got a distribution in Box 19 (without LT or ST gain). My CPA decided to have it as LT gain, and I paid taxes on this amount. In 2022, I got LT capital gains, for which I paid taxes.
For the last (FINAL) year of the K1 project, I got the final K1, which overstates my last gains by the distribution amount from 2021. In reality I have a "double tax pay" situation as I already paid tax for 2021 distribution (which I did not get actual cash for) and now have to pay this amount again. Obviously, there is something wrong.
Can you advise:
1) Do I need to fix 1040 for 2021 now? It seems I should have not paid tax on the distribution amount as K1 did not have any ST or LT gain and there was an ordinary income loss which I carried forward?
2) To make things easy - can 2023 K1 be fixed/adjusted instead to account for my 2021 payment and reduce gains to make it correct i.e. total amount of gain that I need to cover over the project's life until disposition?
Thank you.
