Partner K-1 Assets on 1040

Forum|Forum|4 years ago
February 5, 2022
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I am using Turbo Tax Premier, in the interview for my K-1 for a Partnership Real Estate Rental Income. Why is Turbo Tax asking me to input my asset summary and track depreciation? On the Partnership 1065 assets and depreciation are tracked. I can't figure out why I would need them on our 1040. Any information that sheds light on this would be appreciated.

PatriciaV

Level 15

The IRS requires that the Partnership report Rental Activities separately due to the Passive Activity rules.

From IRS Form 1065 Instructions: Rental Activities :

"Partners who actively participate in a rental real estate activity may be able to deduct part or all of their rental real estate losses (and the deduction equivalent of rental real estate credits) against income (or tax) from nonpassive activities."

For this reason, TurboTax tracks items from Schedule K-1 that may affect your current tax situation or in the future.

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Anonymous

@PatriciaV

Thank yo Patricia. I do understand that I need to do a 1065. I have done that already. I do not complete my 1065 in Turbo Tax, only the 1040. It is on my 1040 that Turbotax is asking me to input assets for the rental activity. Normally, every other year, Turbotax simply asked me for the values found on my K-1.

PatriciaV

Level 15

Pardon my misunderstanding of your question. Please review your Personal Income section to be sure you didn't start a Rental Activity by accident.

If the Partnership owns the Rental Property and reports that activity on Schedule K-1, you would NOT include that information on your 1040 tax return.

However, if you own the Rental Property and rent it to the Partnership, that activity would be reported on your 1040 tax return. (Check the Special Handling of Rental Activities question in the Sch K-1 interview for more info on this topic.)

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