Income and Losses from K-1 same PTP. Loss on Line 1 Ordinary Income. Gain on Line 6 Dividends. Should they offset.

[nexchap]

@77rabtz No.  Line 6 is dividends that the partnership earned (perhaps they owned stock in some other company that paid them dividends).  Line 1 is the profits of the partnership itself (perhaps they make widgets, and lost money on the widget business). 

[77rabtz]

I am still puzzled by this.  When you read the IRS's K-1 instructions page 10 and 11 where it talks about PTP's, it says "combine any current year income, gains, and losses to see if you have an overall gain or loss from the PTP". To me this means ordinary income, rental real estate income, interest, dividends and  capital gains.  The interest and dividends are reported on Schedule B and capital gains reported on Schedule D.  Now, to me that is all income from the PTP, if any one part of that is a loss it seems to me that  the "combine all" instructions suggest they are a source of income or loss from the PTP.  Now it talks elsewhere about tracking unallowed losses by specific categories, I suppose this all ties together some way.

[77rabtz]

I am still puzzled by this.  When you read the IRS's K-1 instructions page 10 and 11 where it talks about PTP's, it says "combine any current year income, gains, and losses to see if you have an overall gain or loss from the PTP". To me this means ordinary income, rental real estate income, interest, dividends and  capital gains.  The interest and dividends are reported on Schedule B and capital gains reported on Schedule D.  Now, to me that is all income from the PTP, if any one part of that is a loss it seems to me that  the "combine all" instructions suggest they are a source of income or loss from the PTP.  Now it talks elsewhere about tracking unallowed losses by specific categories, I suppose this all ties together some way.

[77rabtz]

Obviously I am also puzzled by how to use this message board but anyway.  The process of tracking unallowed losses by category is tied to the tracking of basis and I am not sure how that ties to reporting current year income and losses. 

[nexchap]

@77rabtz There are numerous rules on whether different categories of income and loss can be combined, or must be kept separate.  As an example, box 1 losses and box 2 gains can't be combined.  Dividends aren't passive, so don't combine with box 1 losses.  Etc.

TT will categorize, track, and report this appropriately.  It will not track basis though.  You'll have to do this yourself, where any untaxed cash received lowers basis, any non-cash K-1 entry to raises / lowers your taxes will also raises / lowers your basis.  This calculation will usually mimic the capital account info provided by the partnership, but you'll want to track it yourself as well since the tax rules change when your basis reaches 0.  At that point, TT will provide minimal guidance.