K-1 Distribution

[p5ssref]

I received a K-1 (form 1065) with a distribution in box 19A. This was money I received as a result of the partnership selling property. I did not make an initial investment in the property so does that mean I have no basis? My ending capital account is now negative. This does not alter my income tax after entering the K-1 on turbotax. Am I supposed to enter the distribution elsewhere in turbotax and if so, where? I am told by the partnership it should be taxed as LTG.

[Mike9241]

depending on the type of partner you are and the type of partnership even though your capital account is negative you may have positive tax basis. if Part II item K1 shows ending liabilities some or all of these may be counted as part of your tax basis especially any qualified nonrecourse financing

for example

negative capita a/c (6,000)

qualified nonrecourse financing at end of year 15,000

tax basis is 9,000 however, at risk can be completely different because nonrecourse liabilities provide basis for distributions, but generally do not provide basis for purposes of the at-risk rules.

you can go do your own computations by using the partner capital worksheet in the 1065-K-1 instructions or consult a tax pro because which liabilities count depends on type of partnership and the type of partner you are

see this link for additional guidance

https://www.dbbllc.com/newsletters/focus-our-tax-e-newsletter/partnership-tax-rules-basis-partnershi... 

https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf