Schedule K-1 (form 1065) & Schedule K-3

[mudit]

@PatriciaV  Thank you. Both of my K-1s are Final K-1. 

[prettyspring]

Dear Experts,

I just received my Schedule K-3 so I plan to amend my tax return.  My K-3 Part II, Section 1, Line 24 line A only has US, amt $863.  My K-1 line 21 (Foreign taxes paid or accrued) = zero. 

I found post ‘Form 1065 Schedule K-3 Line 24 how to enter US income but turbotax don’t have option to select US as country’  link >> Form 1065 Schedule K-3 Line 24 how to enter US income but turbotax don't have option to select US as...

My K-1:

Line L, Current Year Net Income (loss):  -$10,000

Box 11 code C, Other Income (loss):  -$10,000

• 1)    The above losses are also listed in col (f) of K-3, Part II, Section 2, Line 31 (Other losses), line 49, 54, and 55.  Is it still OK to uncheck K-1 box 16, not reporting K-3?

  2)     With other stocks, I can only claim the Realized loss if I sold the stocks.  This loss in K-1 is Unrealized Loss.  I didn’t sell any of the Partnership shares and IRS allows me to claim this loss? 

Thank you!

[prettyspring]

Dear Experts,

I just received my Schedule K-3 so I plan to amend my tax return.  My K-3 Part II, Section 1, Line 24 line A only has US, amt $863.  My K-1 line 21 (Foreign taxes paid or accrued) = zero. 

I found question ‘Form 1065 Schedule K-3 Line 24 how to enter US income but turbotax don’t have option to select US as country’  link >> Form 1065 Schedule K-3 Line 24 how to enter US income but turbotax don't have option to select US as...

My K-1:

Line L, Current Year Net Income (loss):  -$10,000

Box 11 code C, Other Income (loss):  -$10,000

1)   The above losses are also listed in col (f) of K-3, Part II, Section 2, Line 31 (Other losses), line 49, 54, and 55.  Is it still OK to uncheck K-1 box 16, not reporting K-3?

2)    With other stocks, I can only claim the Realized loss if I sold the stocks.  This loss in K-1 is Unrealized Loss.  I didn’t sell any of the Partnership shares and IRS allows me to claim this loss?   

Thank you!

[Mike9241 · Accepted solution]

if you are filing form 1040 and not 1040-NR then since all income is US based there is nothing to report for the k-3. uncheck the box 16. as long as you have tax basis the amount on line 11c  (section 1256 losses) are reportable on your 1040. it is a capital loss. it will flow to form 6781 and from there 40% will flow to schedule d line 4 and 60% will flow to line 11. if you have no capital gains for the year up to $3000 may be used in the current year. the remainder carries over to 2023. This is not a passive loss where you would have to sell your partnership interest to take the loss. 

[prettyspring]

Hi @Mike9241 ,

Thank you so much for the detailed explanations! I am filing form 1040-SR.  One more question. I plan to sell all shares of this Partnership before Dec 2023 and it will be a Loss.  For tax year 2023, I should receive a Form 8949 (and 1099-B?), Schedule K-1 (Final?), and Schedule K-3, correct?   Since I was able to claim loss listed in K-1 for 2022, do I have to do any adjustments (for this loss) when filing income tax year 2023?        

Again, thank you so much your help!

[Mike9241]

2023 will be like 2022.  whether you have an actual loss depends on your tax basis which is not the same as what you bought it for. items of income , loss and distributions during the period you held it affect tax basis.   Turbotax will adjust any net 2022 capital loss by the amount utilized so only any unused amount will carry over to 2023