Total loss in syndication investment: should it be reported on the final K-1 form, or should I declare the loss in TurboTax

[ghettodawg]

Finishing my 2024 taxes now. One of my investments is a multifamily syndication that bankrupted in 2024 and the bank foreclosed on the property.

I lost all my investment.

I got a "final" K-1 form for 2024. It seems that the form does not reflex the total loss. 

Is this how it works? Should I declare the total loss in TurboTax (desktop), to reduce my taxes?  

Here is more info about the K-1 and the investment, if needed:

In the 1st year the syndication did a cost segregation study which gave a huge depreciation (showed a huge rental loss in year 1 and also in subsequent years). Since it is passive loss, I could not claim it on my tax return, and it piled as disallowed loss  to be carried over to future years, on form 8582. The "final" K-1 form seems to be reverting that huge rental loss, by showing huge gains on line 9c (unrecaptured section 1250 gain) and 10 (net section 1031 gain). I wonder if their CPA did it right.

[Mike9241]

yes the CPA probably did it right since the foreclosure is treated as a sale.

whether you have an additional loss or gain on termination is unknown.  it all depends on your basis vs the net of all losses and income items through all the years also reduce by any distributions.

. 

https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf#page=7 

or if schedule L of the K-1 was completed your starting tax basis (line 1) for the year is the beginning capital account + your allocated share of debt at the end of last year from item K1 on the 2024 K-1 - beginning column. 

[ghettodawg]

Thank you!

Based on your answer, it seems that IRS will have to trust me that this was a total loss of my investment.

I wonder, in case of an IRS audit, what would be an acceptable proof that the investment was a total loss.

All I have is an email from the syndicator saying that the bank foreclosed on the property...