Final K-1 Question

[mellynlee1]

We received our Final K-1 for a limited partnership that we had invested money in. When entering the information into TurboTax, I selected "This partnership ended in 2021." The next page asks:

Choose how you disposed of this partnership/LLC.

Do I choose:

- Complete disposition

- Disposition was not via a sale

- Sold and am receiving payments

I am assuming I should choose "Complete disposition"? We already received our final payments for this partnership and will not receive any more.

[HiCPA]

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!

[mellynlee]

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!

[Mike9241]

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

[mellynlee]

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?

[Irish22_CPA]

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.

[Irish22_CPA]

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

[Irish22_CPA]

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

[Irish22_CPA]

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

[mellynlee]

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.

[Irish22_CPA]

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. 

[Irish22_CPA]

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.

[Irish22_CPA]

"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.

[Irish22_CPA]

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

[Irish22_CPA]

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.