Have you entered Schedule K-1 under Investment Income? The income from the partnership may affect your taxable income for the year. Review these steps for reporting the end of your partnership investment:
- Describe this Partnership; "This partnership ended in 20XX" and "Complete disposition."
- Tell Us About Your Sale: "Sold Partnership interest." This allows you to report the gain/loss.
- Enter Sales Dates: initial contribution date and date the investment shut down.
- Enter Sale Information:
Sale Price = 0
Partnership basis = initial contribution (if any) adjusted for any activity from Schedule K-1 (see below).
- The next page displays the gain/loss summary for the investment.
You will need to calculate your adjusted basis in the partnership, which would include any profit or loss that was reported on prior year Schedules K-1 less any distributions reported to you. It's unlikely you have a zero basis if the K-1s reported income, long-term capital gains, etc., and you received distributions.
Any gain or loss from the sale would be long-term, as long as you were a partner for more than a year. Otherwise, the sale would result in a short-term gain or loss.
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