I have a failing real estate private partnership investment that looks like I will lose everything on. The general partner has been providing K1s for the last 7 years. I have an opportunity to sell out to the general partner for a $1 value. I do not know what tax reporting instrument will be provided by the partner. Will it be a final K1 ( I suspect not). I assume somehow I would have to compute the difference between the depreciated value of the asset and the $1 value as the loss and record it in TurboTax next year. Or is it simply the difference between my initial investment and the $1 sale price? I really don't know what I don't know here.
I am trying to decide whether to do this or not, that is , take the $1 sale value and declare the resulting loss for 2025 tax return, or wait for the investment to slowly die and assets transferred to preferred bond holders ( and presumably get a final K1 in 2026 or 2027 or ??) showing the final dissolution of the limited partnership. I don't l know whether I will need to enter special forms in Turbotax to record this transaction or not?
I assume I just cancel the carryover of the current K1 for this investment when I start my 2026 return. Will I need to retain any of that information for calculating the resulting final loss? Should I try to engage with a local tax consultant and dig more?
