Very much have appreciated @Rick19744 and many others contributions to the K1 forum and hoped to get last minute feedback on my final K1.
Received a Final K1 from a real estate partnership which sold its only asset in Dec 2023 from which I received my distributions. Purchased asset in 2019.
From the K1 (1065):
L:
Beginning Capital Account | -2266 |
Capital Contributed During Year | |
Current year net income (loss) | 45297 |
Other increase(decrease) | -143 |
Withdrawal and distribution | 42888 |
Ending Capital Account | 0 |
From Part III
Box 2: Net rental real estate income 12337
Box 9c: Unrecaptured section 1250 gain: 3974
Box 10: Net Section 1231 gain (loss): 32960
Box 19: Distributions: 42888
I've struggled with the turbotax question tree and had hoped someone can weigh in on if my choices makes sense:
> I selected this as partnership was liquidated as a result of sale of the assets in the partnership
>Complete disposition seemed most applicable here as I did not sell my interest in the partnership, rather the partnership was liquidated. This option, to my understanding, generates a final K1
>What sale date should be used here? The date that my distribution is posted seems most applicable.
>Again, sale price without a sale appears incorrect? It does not appear consistent with K1 documentation
>Is this scenario consistent with "disposition of an interest in a partnership?" Based on my read, I selected no
>Ultimately, I carried over losses on this property that offset gains. Is this unusual for real estate deals?
Appreciate the late advice. I thought I had this figured out but now am hoping for a second pair of eyes.
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Some follow-up comments:
Here are a few comments:
Thank you @Rick19744 I'm afraid I'm lost on tracking tax basis, I'm assuming that tax basis is same as "Partnership Basis" asked for in TurboTax?
I understand tax basis = money contributed, liability contributed, income partnership received LESS losses and nondeductible expenses.
For 2021 this would be:
35000 + 61202 ( 59403 QNR financing + 1799 non recourse share of liability contributed) + (0 income) -31531 (losses) = 64671
On my 2021 tax Box 20 Code Z, there is a note that "unadjusted bias of assets is 84225". Seems like I'm missing something
Not sure I should attempt 2022 or 2023 estimation without knowing I'm on the right track ...
2021 | 2022 | 2023 | |
Starting | 0 | 3469 | -2266 |
Initial Investment | 35000 | ||
allocable net income | -31531 | -5148 | 45297 |
cash distribution | 587 | 42888 | |
Box 2 rental inc/loss | -31531 | -5147 | 12337 |
Box 10 | 32960 | ||
Box 19 Distribution | 42888 |
The UBIA reported for Schedule K-1 Box 20 (QBI) is not related to your tax basis in the investment. In most cases, your tax basis is your calculated partnership basis, not the ending capital that appears on Schedule K-1 Part L.
Your calculation of adjusted basis appears to be accurate, as long as there were no other adjustments on prior K-1s for items specifically allocated to you (and not reported in the allocated partnership income). These items are typically reported on a Supplemental Information page that comes with Schedule K-1, and may include charitable contributions, non-deductible expenses, etc.
Some follow-up comments:
Thank you for your responses. You were so helpful in me being able to file. Was also able to check on prior years returns to ensure I had done my math correctly. Absolute great response.
Some clarifications.
I made an initial typo. Investment occurred 2021, not 2019.
You are welcome
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