Final K-1 Question

Hi @mellynlee1 !

If you already received your final payments from the partnership and you have completely dissolved your share in the partnership through a sale, you can select the "complete disposition" option.

The TurboTax screens will then follow up to ask more questions about your sale, including entering in your sale date(s) and sale information.

Here is the IRS instructions for Schedule K-1 for a beneficiary filing form 1040 or 1040-SR for your reference. Link here

Enjoy the rest of your day!

Thank you for your response.

I selected 'Complete Disposition', and TurboTax is requesting more information, as you mentioned.

For 'Purchase Date', what do I put?

- The date the check (of our investment) was received? (or the date the check is written?)

- The date of the letter that confirms receipt of above check?

For 'Sale Date', what do I put?

- The date of the final check that we received?

The following page requests information about Regular Gain/Loss and AMT Gain/Loss. 

You provided a link to help with filling out this information. However, when I look at those instructions, they don't make any sense with my K-1. The link you provided is for Schedule K-1 (Form 1041). I have a Schedule K-1 (Form 1065).

Is there something that can help me fill out the information that TurboTax is asking for?

When it asks for 'Sale Price', do I just enter the amount of my final check? 

I have no idea what the Selling Expense, Partnership Basis, Ordinary Gain, or 1250 Gain is.

My K-1 has a couple of extra pages of information, namely Long-Term Capital Gain amount, but also has a different amount for Transferred Capital (Total other Increases/Decreases).

There are several Footnotes as well that make no sense to me and I'm not sure what to do with them:

Section 199A, Schedule K-3, and Section 163(J)

They all say "Please consult your tax advisor.", but I don't have one.

Can someone please help me?

Thank you!

was this a publicly traded partnership where the disposition was reported on 1099-B? if no, ignore. 

I did not receive a 1099-B, so I assume it wasn't publicly traded.

We have a Limited Partnership -- we invested $$ to purchase land, which was later sold.

So, are you saying we should ignore all the questions that TurboTax asks?

Put nothing for Purchase Date and Sale Date and the entire page requesting Regular Gain/Loss and AMT Gain/Loss?

The doesn't sound like a publicly traded partnership - as it would have been purchased on a public exchange, and you would have received a 1099-B. You are a limited partner? What date was the purchase? Have you been reporting income/losses each year since purchase on the property on your 1040? These things are important to know to determine your cost basis - which would be purchase price plus gains and additional contributed capital, less losses and distributions.

You will still enter an amount for  Purchase Date and Sale Date and the entire page requesting Regular Gain/Loss and AMT Gain/Loss.

The date it is paid on the date the partnership recorded your interest in the partnership and you as a partner. 

For 'Sale Date', what do I put? That would be the date the partnership ended. That should be listed in the K-1.

OK, so the Purchase Date was the day we wrote our check: 2/13/2018

The sale date should be the date of the final check that we received? 12/17/2021

I have received a K-1 for 2018, 2019, 2020, and 2021 and have entered the requested information from these K-1 forms every year in TurboTax. However, this is the first final K-1 I have received, and since this limited partnership has ended (since the land has been sold), TurboTax is requesting this additional information.

Are there instructions on how to fill out the TurboTax form requesting the Regular Gain/Loss and AMT Gain/Loss? I have no idea what to put on that page.

From there do not enter any gain or loss information for the total purchase and sale in the K-1 section. Enter ZERO for both cost basis and sales price here. You will enter this information in a different area of Turbo Tax. By the way, if you purchase TTLive, an expert will walk you thru these steps on the phone with smart look, answer any questions, and make sure you are 100% comfortable with your entries. 

I apologize, and edited that post for the purchase and sales date -- see correction in above post. But honestly if the dates are close to that, that is all that matters, since this is a long term gain regardless.

"I have received a K-1 for 2018, 2019, 2020, and 2021 and have entered the requested information from these K-1 forms every year in TurboTax."  --  This is great, and you will need this information. I will tell you why shortly.

"Are there instructions on how to fill out the TurboTax form requesting the Regular Gain/Loss and AMT Gain/Loss? I have no idea what to put on that page."  - Ignore this section. You will be entering the gain/loss in another area of Turbo Tax to assure it receives capital gain treatment.

Did you have gains or losses each year flow thru from the K-1 in the LP?

Now lets record the sale. I'm presuming you are in Turbo Tax Online.:

Click on Federal > Wages & Income
In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other. If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far. Click on the Add More Sales link.
If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 20XX? Click the Yes box.
On the screen, OK, what type of investments did you sell? mark the Other box and click Continue.
When you get to the screen, Now we’ll walk you through entering your sale details enter the details of the sale. 
Click Continue when done.

I'm sorry...I seem to be replying to your earlier posts, and then I saw your later posts.

To summarize:

The Purchase Date is the date they received my check and confirmed (2/16/2018)

The Sale Date is not listed anywhere on the Final K-1 (there is no date listed). I have the stub of final check sent to me, along with a dated memo stating the final sale occurred. The date is 12/17/2021, so I will make this the Sale Date.

I'm not sure what you are referring to when you mention to enter ZERO for cost basis and sales price. TT does not ask me for this information here.

On the next page, TurboTax asks for the following: Selling Expense, Partnership Basis, Ordinary Gain, 1250 Gain

I have no idea what to put there.

I would love to use TTLive, but I purchased TurboTax Desktop, and I thought you could only use TTLive if you purchased the online version?

In the Sale of Investment Section enter Sales price to equal the amount of the check you received from the LP upon dissolution.

For purchase price enter the adjusted partnership basis. That calculation is: Purchase price + additional contributed capital + profit for each year  LESS distributions + losses for each year.

Sorry, I replied to an earlier post, and just saw your other posts.

To answer your question about gains/losses flow through from K-1 to LP...I'm not exactly sure what you mean. If you mean, did I receive any other checks from this LP, the answer is NO. This is the only check I have received (in 2021), and I don't believe we had any gains or losses in the previous years since we were waiting for the land to sell.

Hi,

I see all of your additional posts. I am NOT on TT Online, I have TT Desktop - does that matter?

Also, I'm SO sorry, but I have to leave for an appointment now, but will be back in 1 1/2 to 2 hours...will I be able to contact you again?

Thank you so much!

I'm sorry I will be off shift then. I can recheck tomorrow. The steps in Desktop will be very similar. Give it a try and let me know. Or you can call in - we do offer live advice for desktop, but they will ask for an upgraded charge from you. The important thing is to leave the gain amount blank in the K-1 section. And record it in the Investment area. Unless you can determine the gain/loss amount based on the basis calculations steps I provided you. That would work also. Ignore the AMT area. If you are high income, just enter the same amount.

Try the steps in this link to enter the sale in Desktop. The LP can be classified as Land or an Investment - either will work.

I upgraded my TT from Deluxe to Premier.

I left everything blank in the K-1 section (from my original question). I selected "Complete Disposition", but then left the Sales Date and Purchase Date blank, as well as EVERYTHING on the following page regarding 'Regular Gain/Loss' and 'AMT Gain/Loss'.

Should I have filled out any of that information?

I then followed your directions to go to the Wages/Income section, and entered a new investment, saying "I'll enter one sale at a time".

The following items appeared, and I answered as shown:

Description: Land Sale

Date Sold:  12/17/2021  (This is the date of the check we received with final payment)

Date Acquired:  2/16/2018 (This is the date our check was received and accepted, according to a letter)

Sale proceeds:  Do I put the amount of the check that we received on 12/17/2021?

Cost or other basis: Do I put the amount of the check we sent in on 2/16/2018? We did not send any additional $, nor did we receive any other $ except for this final check on 12/17/2021.

Holding period: Long Term (Box F)

Thank you!

Description: Land Sale

Date Sold:  12/17/2021  (This is the date of the check we received with final payment)

Date Acquired:  2/16/2018 (This is the date our check was received and accepted, according to a letter)

Sale proceeds:  Do I put the amount of the check that we received on 12/17/2021?

Cost or other basis: Do I put the amount of the check we sent in on 2/16/2018? We did not send any additional $, nor did we receive any other $ except for this final check on 12/17/2021.

Holding period: Long Term (Box F)

yes to everything except cost. with a partnership, your tax basis (cost) changes with its activity which affects the partner's interest.

you start with what you paid in 2018 then from each year's k-1 you need to add all items of income and subtract all items of expense or loss if these are zero then it's what you paid in 2018. 

OK thanks. 

Regarding Cost, I looked through the K-1's from 2018-2020. None of them list any Ordinary business income (loss) - Part III #1.

However, there is a section L under Part II (Information About the Partner) that lists the 'Partner's capital account analysis'.

On each of the K-1's, there is an amount for 'Current year increase', and it shows an amount for 'Ending capital account'. It also selects "Tax basis". Each year, the 'Ending capital account' has increased by a small amount - usually equal to a number in the K-1 under 'Interest Income'.

The final 'Ending Capital account' number on the 2020 K-1 is slightly higher than the amount of our original check.

Is that the number that I should put into the "Cost or other basis"?

yes income that adds to basis/cost would include the following (2021) k-1 lines in part III.  1 thru 3, 4c, 5, 6a, 7,8,9a,9b, 10 and 11

less lines 12, 13, 15 and 18.  these lines vary from year to year because the IRS revises the form 

you can take the ending capital amount from 2020 and then from section L in 2021 add the current year's net income and other increases or subtract if other (decreases). in theory that should leave withdrawals and distributions equal to the final check you got and your ending capital will be zero.  if withdrawals and distributions amount are more than the final check then it's likely you got other payouts during the year. The other payouts, if any, would also reduce your basis/cost 

put another way your basis should equal the final distribution amount because you start with what you put in add the net income each year (or subtract the net loss)  and subtract all distributions other than the final one.