Welcome Guest. Register Now!  


For 2013 Tax Tips For Year 2013.


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-26-2014, 08:42 PM
Junior Member
 
Join Date: Feb 2014
Posts: 1
K 1 form

Hi,

I have a stock that is a partnership and I'm not sure how to answer these questions on H and R block. any help?

"Is all of your investment in this partnership at risk?

Do the entries for this Schedule K-1 include adjustments for losses disallowed in prior year due to basis limitation?"



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-27-2014, 12:51 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by hey_jay View Post

#1;"Is all of your investment in this partnership at risk?

#2;Do the entries for this Schedule K-1 include adjustments for losses disallowed in prior year due to basis limitation?"

#1;it depends; There are two different ways you can be at risk for a partnership investment. 1) through your capital account, and 2) through recourse liabilities. 1)The capital account keeps track of the money you originally invested in the partnership until it goes down to $0, you still have money that you are at risk of losing for tax purposes. ; recourse liabilities means that the lender could come after you and your assets to satisfy the debt , this should never apply to LPs in an MLP or LLC members; by definition, you should not be on the hook for the entities' liabilities - if you are, then you have non-tax problems. Nonrecourse liabilities mean that the lender cannot go after you, they can only go after the collateral, and if the collateral is insufficient to cover the debt, then the lender is SOL and you are not at risk there.

#2;Correct; basically, your basis limitation is a limitation on the amount of losses and deductions that you, as a partner of the partnership can deduct on 1040. The basis limits are the first of three limitations that are applied to Sch K-1 losses and deductions. After the basis limits are applied, the At-risk limits are applied. If losses are allowed by the basis and at-risk limits, the passive limits are applied on 8582, if applicable. the capital account shown on your K-1 is not the same as youir basis in PS. the basis schedule represents outside basis while the capital account represents inside basis. These can differ, even when the PS maintains its books and records on a tax basis. One way this difference can occur is when you buy your PS interest from another partner, since the purchase price becomes the starting point for your outside basis.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Form 1041 for Estate/Trust - Combining by filing Form 8855 Reno98 Trusts and Gift Tax Returns 1 02-09-2014 10:53 PM
Which Partnerships are required to file Form 8804 and Form 8805? TaxGuru Limited Liability Company 0 05-06-2013 02:45 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.