K-1 how to treat withdrawal fee?

I received a final K-1 after disposing my interest as a limited partnership in a crowd-funded real estate partnership. In my section L capital analysis I see something like this:
Beginning capital account: 1000

Capital contributed during year: 0

Current year net income (loss): -10

*Other increase (decrease) (attach explanation) : -20

Withdrawal & distribution: 970

Ending capital account: 0

 

A footnote attached with my K-1 package explains the *other increase(decrease) as: "Adjustment due to transfer/withdrawal". So this I believe is the withdrawal penalty/fee levied by this crowdfunded eFund partnership.

 

It looks like the partnership has added all the income/loss + deductions to arrive at the net income, so at this point my adjusted basis calculation is consistent with the L analysis at 1000-10: $990. 

 

In TurboTax the "enter sale information" section asks for sale price (I put withdraw-ed amount from above): $970. What should I put for "Selling Expense": should I put the $20 from the decrease due to withdrawl? Or do I include this $20 to increase my adjusted tax basis calculation? Should I not include this $20 amount at all?

 

It kind of make sense to me if I do not include it anywhere: My basis is $990, My sale is $970 and my capital loss is $20 which is consistent with the fee the partnership has charged me.

 

However I can also arrive at the same capital loss by including the $20 in my basis as an expense so: $990-$20 = $970. And also claiming $20 in my selling expense, so that I also get a capital loss of $20.

 

What would be the appropriate way to enter this?

ThomasM125
Expert Alumni

Investors & landlords

The withdrawal fee should be listed as a selling expense.

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Investors & landlords

Thank you for your help!

 

Should I also decrease the basis by the withdrawal fee amount, like my second proposal?

MaryK4
Expert Alumni

Investors & landlords

No you do not want to adjust the basis for the fee- TurboTax will make the adjustment!  

@S8NpTl

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