Partnership transactions can get complicated very quickly.
Yes, you do need to include a Section 751 statement with your tax return.
Sometimes a partnership K-1 will provide some language. If this was not provided, then see below.
I believe you can include a pdf statement and still efile your return.
The statement should include the following:
- A heading with your name, tax return form (1040), year and your SS# (I realize this will be duplicated below, but the purpose of this heading is in case this pdf gets detached from your tax return in any IRS review process)
- A subheading that states "Statement for Transfers or Distributions of Interests in Partnerships Holding Section 751 Hot Assets in accordance with Regulation Section 1.751-1(a)(3)"
- Under that list your name and SS#
- Then list the sale date and the partnership name and EIN
- Gain on sale attributable to Section 751 property (which is the $3,602)
- Capital loss on sale (which is the $4,567)
There is no standard format for this disclosure as long as it provides the information required by the regulations; which the above is in compliance.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
