All entries on the K1 should report the income from the investment club that is required to be reported on the tax return. If this was the last year in the investment club and you actually redeemed/sold your share of the investment club then a sale or redemption needs to be reported as well, separate from the K1 entries. Here are some tips that may help.
- The K-1 may show your capital account, however you should maintain an ongoing cost basis as you go along. Any dividends that are paid directly to you are income, but not more investment. If your dividends are used to purchase a greater share then they are taxable income and also, because of this, they are added to your initial investment which can make the record keeping difficult unless you are in the habit of maintaining up to the minute information. Excel can be good for this.
- Your capital investment initially, as well as any capital contributed will be used to offset any sale or redemption when you want to get rid of this investment. At that time you will see that your investment is used to reduce your tax.
- For this investment, the K-1 will be the document that provides all the information you will report on your tax return each year.
Please update if you need further assistance and provide any clarification you can.
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