K-1 form - received shares - how to handle in TT?

[jschoomer]

Invested $10,000 in a partnership with my ex-company (they were owned by a private equity firm) in 2018. In 2024, the ex-company went public and they gave me 300 shares @ $50/share as a result of the partnership. So the 2024 K-1 shows beginning capital account as $10,000 and ending as $0 with withdrawals and contributions as -$10,000. This is not the final K-1 (the box is not checked).

1. Is it correct that I have to pay long-term capital gains on the proceeds even though I haven't sold any of those 3000 shares? Cost basis: $10,000. Proceeds: $15,000 (300 x $50/share). Gains: $5000.

2. When I do sell these shares in the future, at that point, my cost basis for the shares should be $50/share, correct? Even if the broker has some other number, I should correct the cost basis myself.

3. Even though I did not sell anything, and only had these 300 shares given to me by the ex-company, should I answer "yes" to Turbo tax questions "Disposed of a portion of my interest in partnership during 2024?" and "Sold Partnership Interest?'

4. Turbo Tax says that starting 2024, IRS is requiring partners receiving property distributions to file a new form 7217 - Partner's Report of Property Distributed by a Partnership. The ex-company did not file Form 8893 on my behalf but from what I understand if the distribution is of cash or equities (shares), I do not need to file the new form 7217. Is that accurate?

5. For Turbo Tax question "Describe the Partnership", should i check the box "All of my investments in this activity is at risk"?

Thanks in advance!

[RobertB4444]

1. Yes, this is a taxable transaction.  You're paying taxes on the increase in basis.  

2. The basis for the shares going forward will be $15,000 when you sell them.

3. Yes, since your interest in the partnership has been disposed of.

4. You are required to file 7217.  You don't have to file if you receive only cash but you do have to file if you receive property or securities (or only partly cash).

5. All of your investment in the activity is at risk is correct.

@jschoomer