Schedule K-1 (Form 1065) only info is Box 19

[rohiz]

Hi - my husband was given equity in his company (LLC) when he was hired in 2014. He received a distribution in 2019 and was issued a K-1, Form 1065. The only information populated in Part III is Box 19: A - Cash and Marketable Securities. When I enter this information in Turbo Tax, my Tax refund/liability doesn't change. It is a sizable distribution with $0 Tax Basis and the Partner Footnotes on the supporting schedule notes that the distribution should be considered a long-term capital gain. Also, at the end of the Wages & Income section, Turbo Tax states there's missing info from my K-1. Suggestions on what to do?

[taxes4sumting]

the entire distribution is gain if the basis is zero and you can report it in the stock sale area.

[rohiz]

Thank you! I went to the Investment Income section of Turbo Tax and selected Sale of Stock. A few questions:

1) Should "Date Sold" reflect the date of the distribution?

2) "Did You Buy This Stock?" None of the options apply and there is no "Other" option like the "Learn More" link suggests ("Other method: You obtained the investment through a method not listed.").  When I select the best option - "I received this stock as a result of a merger, stock dividend, or other corporate activity.", it asks to select the way I originally acquired the investment but again none of the options (bought, inherited, divorce, gift, short sale, cash in lieu of fractional shares, demutualization of life insurance company, wash-sale window). What should I select?

[DavidS127]

See separately the questions about "stock/stock options" versus your mention of a Form 1065 K-1.

To report the long-term gain for a distribution in excess of basis (distribution up to your basis is not taxable),  click the "magnifying glass Search" icon on the top row, enter "investment sales" in the search window and press return or enter, and then click on the "Jump to investment sales" link.  After Yes you sold, and No for 1099-B, choose "Everything Else".  Enter a description (e.g., Distribution in Excess of Basis), the amount in excess of your basis, and the date you received the distribution.  Your cost basis will be zero for the amount in excess of your basis.