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Ask the Experts All About the W-4! >> Event happening TOMORROW!
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investment club dissolution

My investment club is closing, which changes how you input data into
Turbotax. I have a large capital loss. These large capital losses do not appear
on the K-1 under 8 or 9a. They occur because the beginning
capital account in section L of the K-1 is larger than the
withdrawals and distributions (with ending capital account
being 0).. If I use the information
from section L on the K-1 in the turbotax software, it does populate
the loss into Form 8949, but adds the net profit on my
withdrawal report in the "tax allocations" section to the
final amount. This doesn't seem fair, as I am already
paying taxes on the profit, and then I lose some of the
capital loss when it is added to the final gain/(loss)
realized on withdrawal. Do you have any insight into whether Turbotax is doing this correctly?

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1 Reply
PatriciaV
Expert Alumni

investment club dissolution

If you received distributions in excess of your basis in the investment, you cannot have a loss on the dissolution because the investment generated a profit to you. Excess distributions are generally taxed as long-term capital gains in the year you receive the distribution.

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