topic K 1 in Investors & landlords

K 1

joelHSR — Mon, 24 Jul 2023 18:52:35 GMT

I invested in real estate partnership a number yrs ago that was sold/liquidated in 2022. I received the K 1 and when completing Turbo Tax the basic questions as to basis and sale price were asked. Is the reported basis my original investment, or the Beginning capital amt reported on KI or something else? Is the sale price the Distribution reported on the K1 line 19 or that less the Beginning capital amt?

Re: K 1

Mike9241 — Mon, 24 Jul 2023 19:09:03 GMT

if this was a publicly traded partnership you should have received a supplemental schedule for determining your tax basis and the amount of any ordinary income recapture which increases tax basis for capital gain/loss purposes.

example

sales price $50 tax basis before ordinary income recapturer (sometimes referred to as section 751) $30 = $20 gain. $40 ordinary income recapture is reported in supplemental schedule and usually on line 20AB of k-1

your tax basis is now $70 so you have a $20 capital loss and $40 of ordinary income.

for a private partnership one should assume that schedule L is on the tax basis as required by the IRS (no guarantee) so tax basis is beginning capital + capital contributed + current year income or - current year loss + other increase - other decrease. selling price is line 19 which hopefully is the same as schedule L line for withdrawals and distributions. and ordinary income recapture, if any, should be note on k-1 or a supplement.

Re: K 1

joelHSR — Wed, 26 Jul 2023 20:47:07 GMT

thanks the partnership was private I believe the K-1 Part II sec L, the capital acct analysis, reflects the basis as there were periodic distributions over the years. The math appears that way: initial investment plus or minus profits/losses less distributions. This is why I asked if the basis was the 2022 K-1 Beginning cap acct. I guess some of the routine distributions were capital or orign invmt return Correct?

A second question since both Part III boxes 1 and 2 had values Turbo Tax says to do separate K-1 schedules. If I do this, how do I avoid doubling the capital gain being doubled?

Re: K 1

Mike9241 — Wed, 26 Jul 2023 21:24:44 GMT

since this was a real estate partnership i would put just line 1 on a second k-1. mark it final so it doesn't show up next year. and on the disposition subsection just show it with 0 sales price, zero, basis.