Rick/Patricia/Anyone???? Here is another summary of the issue:
I received a "Final" K-1 for a passive investment I made that turned out to be a total loss. I invested $20,000 in this project (my basis) but the Final K-1 shows an Ordinary Income loss of $125,786. I'm not sure how that is possible on a $20,000 investment, but I have been assured that is correct. In order to claim the loss on my tax return (i.e. so that it is not limited to passive gains, of which I had none), I Quick-Zoomed to enter disposition of partnership info which took me to the Additional Info sheet for the K-1. In Part II, I entered the sales price of 0 on Line 5 and my basis of $20,000 on Line 7. The result is a Long Term Loss of $20,000, which is accurate. But the 1040/Schedule E reflects a loss of $125,786, which reduces my taxable income by that amount, theoretically saving me many thousands of dollars in taxes, which would be awesome if true. Is that correct?
Additional notes responding to “Comments” from Rick19744:
1) I have had this investment since 2020. I made one $20,000 investment at the time and there has been no activity (either distributions or additional investments) since then.
2) This is an LLC.
3) No suspended loss or any other activity from this LLC since inception.
4) Box L shows $20,000 as Beginning Capital Account. It also shows (125,786) as current year (loss) and $105,786 as "Other Increase" with no explanation.
5) The only figure shown in Part III is Ordinary Income (Loss) of (125,786).
So I REALLY NEED SOMEONE TO TELL ME: Is TurboTax correct that I can claim the $125K ordinary income loss shown on my K-1 for this investment???
THANK YOU!!!
