I have this same question on my 2020 return. The K-1 is a final K-1 and the entire investment is written off. It shows beginning capital account of $26,500 and a current year net loss of $-25,000 and Other decrease of $-1500. There is no entry on line 19 (Distributions) as there were no distributions. This is a total write off. The only help I have is a note attached to the K-1 that shows the -1,500 as an adjustment for syndication costs. It states that Item L is Beginning Account Method used -- Tax Basis. There is a footnote the says, "our share of the fund's capitalized syndication costs is: 1500.
You may be entitled too deduct these costs on your tax return. Please consults your tax advisor.
I don't have a tax adviser as I use Turbo Tax Deluxe. If I enter the -25,000 in Turbo Tax as the current year loss and on the next line -1500 other decrease then there is nothing in the rest of the K-1 to document the -1500. I think the companies account is lazy and doesn't want to tell us how to handle this.
I'm afraid of an audit from the IRS if I file without more help from the K-1. Don't want to file an amended return, really messy. Don't see much help here, as you advice assumes there is an entry in the K-1 to explain the syndication loss. Without another entry in one of the other boxes, doing the above doesn't write off the 1500 syndication costs. I'm sure it is legal to do this, but how to do it without an audit from the IRS?
Thanks for your help. Hope you see this!
