No Final K-1 Received, How to enter in TT so loss is recognized

[Owl157]

I was a passive investor in an LLC taxed as a partnership that shut down in 2023. They have not issued K-1s for several years and did not do so for 2023. I've researched how to handle and believe I know my basis, my suspended loss, and capital account balance. The posts I've seen on this topic said to enter a K-1, mark it as final, and enter the prior year suspended loss. I've also told TT I disposed of my holding and checked the box that the partnership discontinued. However, I'm not seeing anything flow to Schedules D or E and am not sure what the supporting worksheet should look like i.e. which boxes would flow to those schedules. So, I'm hoping someone can help me make the correct entries. Some specific questions:

- my last capital account balance was negative. In the interview, I entered that as my beginning balance. Should my ending balance be the same or should it be $0?

- should I say I disposed of my interest rather than the partnership ended? 

- TT didn't carry my Suspended Loss forward from 2019 so I have to enter it manually. However, it's not clear where to enter that and whether what TT calls "Passive Loss Carryover" is the same thing.  I checked the box saying I had passive losses carried over and then entered the amount as Ordinary Gain/Loss sale of partnership interest.

Thanks in advance!

[PatriciaV · Accepted solution]

Yes, you have recorded this situation in the correct manner. Here's a summary of how your entries should be made:

1. Beginning and ending basis will be the same (negative). Ending basis is set right before you dispose of the investment.

2. Check the boxes for "This partnership ended in 20XX" and "Complete disposition."

3. Check the box for "Sold Partnership Interest" to allow you to enter sale information so your suspended passive loss carryovers offset any potential gain.

4. Purchase date is your first contribution to the partnership; Sale date would be 12/31 of year you are reporting the dissolution.

5. Selling Price = zero.

6. Partnership Basis is per your records, a negative number. If you have AMT Basis, enter that as well.

7. TurboTax will calculate a tentative regular and AMT gain or loss.

8. Continue to the page "Describe the Partnership" and check the boxes for "I have passive activity losses" and "All my investment is at risk."

9. Passive loss carryovers (suspended losses) are per your records for Regular, AMT, and QBI. TurboTax will ask you to break down the QBI losses by year (be sure to enter zeroes for any years with no QBI carryovers).

The suspended losses will offset the tentative gain/loss previously calculated. The net will be reported on Schedule E page 2 Part II Line 28 under Passive Income and Loss. The sale is reported on Form 8949 Part II Line 1 and on Schedule D Part II Line 10.