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qwer1234
Level 2

K-1 At Risk option

I have a headache entering K-1 information in TurboTax.

 

Describe the Partnership: shall I check the option "All of my investment in this activities is at risk."? Without checking the option, the income loss cannot offset capital gains. 

 

 

1 Best answer

Accepted Solutions
nexchap
Level 7

K-1 At Risk option

When you first invest in a partnership your investment is "at risk":  if the partnership went out of business, you'd lose your investment.  But over time, the partnership will return money to you (distributions) or it will give you deductions on your taxes (losses that you'll eventually claim).  Each of those events reduces the money you have at risk.  So if you started by investing $100, and over the years the partnership has returned $101, you'd no longer be able to check the "Investment at risk" box.  At that point, the tax treatment for losses changes.  Until then, you keep checking it.

**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!

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3 Replies
Mike9241
Level 15

K-1 At Risk option

we have no way of knowing if you are at-risk.

here's a worksheet you can use

https://tax.thomsonreuters.com/content/dam/ewp-m/documents/tax/en/pdf/other/quickfinder-updates/qpep... 

nexchap
Level 7

K-1 At Risk option

When you first invest in a partnership your investment is "at risk":  if the partnership went out of business, you'd lose your investment.  But over time, the partnership will return money to you (distributions) or it will give you deductions on your taxes (losses that you'll eventually claim).  Each of those events reduces the money you have at risk.  So if you started by investing $100, and over the years the partnership has returned $101, you'd no longer be able to check the "Investment at risk" box.  At that point, the tax treatment for losses changes.  Until then, you keep checking it.

**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!

View solution in original post

qwer1234
Level 2

K-1 At Risk option

Thank you for sharing the working sheet. I purchased this Oil Fund like other stocks but surprisingly found it much more sophisticated than expected.  I ended up exiting the position at a loss in 2020. Now I need to deal with the complexity of 1099-B and K-1. 

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