I've read Partner's Instructions for Schedule K-1 (Form 1065) and various explanations on At-Risk restrictions and am still not 100% clear. My question is not about the At-Risk restriction but whether "all my investment is at-risk"
I am an LP in a Real Estate syndication, where I invested $xxx cash. My K-1 Part II, Line K shows Partner's (my) share of Non-recourse liabilities and Qualified nonrecourse liabilities, presumably for loans taken out by the sponsor to finance the acquisition and development of real estate properties. Line L shows my Beginning and Ending capital accounts.
Turbotax then asks "All Investment in Partnership is at-risk?" - Do I say "yes" because by "All investment..." they mean the $xxx cash that I invested in (ie. partner level) since I can theoretically lose all $xxx if the real estate deal goes south?
What if my share of the nonrecourse and qualified nonrecourse financing amount is greater than my Ending capital account? (my share of nonrecourse liability is $10K, qualified nonrecourse financing $42K, and my ending capital account balance is $45K.). Does that matter?
Turbotax also asks "Some investment in Partnership is not at-risk?" Are they referring to my share of the non-recourse liabilities (since LPs are not liable for such liabilities etc), or referring to some situation where I may have guarantee not to lose my money (unlikely).
I believe the right answer is "yes, all my investment in partnership is at risk" in such case, but I wanted to make sure I didn't misinterpret.
