Discussion:K-1 of partner with 0 partnership basis
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Discussion Forum Index --> Basic Tax Questions --> K-1 of partner with 0 partnership basis
Discussion Forum Index --> Tax Questions --> K-1 of partner with 0 partnership basis
Www.cpa1.biz (talk|edits) said: | 22 July 2008 |
| Almanacers,
What am I seeing something wrong here. A partner in a partnership has excess distributions and has zero as his basis. His share of the yearly loss is around 6,000. It show this on the K-1 for him. I assuming since his basis is 0, he is not allowed to take this loss but why would it show on the K-1? If was to give him this K-1 and he gave it to his CPA, the CPA might not know that he has zero basis and take the loss against his other income or his spouse's income. Is there somewher I should be notating on the K-1 that this loss is either netting to zero to show nothing on taxes or what? Thanks | |
Michaelstar (talk|edits) said: | 22 July 2008 |
| Unless the partner has outside basis which you may or may not know anything about, the preparer should be looking to inside basis or at the recon of the capital account on the K-1 (assuming tax basis) and his share of debt allocated to him if any. If the preparer takes losses for more than what the partner is at risk for, they would be wrong. You could also attach an added statement to the K-1 informing the partner as to there being possible basis/loss limitations but that is only an idea. | |
RoyDaleOne (talk|edits) said: | 22 July 2008 |
| The loss is shown on the K-1, it is the preparer of the 1040, in this case, to limit the deduction first for basis, second for at-risk, third passive activity, if any. | |
Www.cpa1.biz (talk|edits) said: | 22 July 2008 |
| Almanacers,
Also regards to this post, if the losses that are not allowed because of zero basis, where are they carried forward on, the 1040 or the 1065 K-1? | |
| 22 July 2008 | |
| neither, www. they are carried forward in your head. or a worksheet. or your software. | |
Www.cpa1.biz (talk|edits) said: | 22 July 2008 |
| Thanks for the info. Take care. | |
