Hello. I've read several replies on this topic by @Rick19744 like This reply and and This reply but unfortunately I am still unclear on how to apply that to my situation, especially when Rick mentions "Your 'selling price' will be your liquidating distribution. Make sure you don't double count this; include it in your basis calculation and then also as selling price."
Situation: I am reviewing my 2021 tax year return via TT. I was a passive LP in a real estate partnership, final K-1 in 2021.
I always thought that my basis was what I initially contributed, $50K. So I put this as basis, and $63K final distributions as sale price.
However, my capital acct (Sec L) went down over 4 years of partnership, from the original $50K to $4k (in simplified numbers). Entries:
Sec L:
* Beginning capital $4K
* Current year net income $59K - this is from
Sec III.2: $5K (RE income) and
III.10: $54K (section 1231 gain)
* Distributions $63K (also reported in Part III 19.A)
Part III 9c: $7K (unrecaptured sec 1250 gain)
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TT then added $13K (63-50 from sale), $5K, and $54K to result in $72K gain.
This looks excessive to me as, from the bank account point of view, I invested $50K, got back $63K and maybe $5K in distributions over the years). Is the calculation correct? Could this effect be accounting for the capital change from $50K to $4K? (BTW, I am afraid I missed the $34K loss carryover from 2019 to 2020 for this partnership, when I switched software from HR Block to TT :( )
How do I enter this correctly?
