Discussion:Worthless Partnership Interest

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Given the entries on the K1 can I take an ordinary loss for a worthless partnership interest in 2008? Given the entries on the K1 can I take an ordinary loss for a worthless partnership interest in 2008?
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 +{{ForumReplyPost|UserID=Michaelstar|Date=20 October 2009|Text=Based on the K-1 you received and your post - my answer would be No - you will not be able to take an ordinary loss for this ending capital account. See Rev. Rul. 93-80.}}

Revision as of 17:59, 20 October 2009

Discussion Forum Index --> Advanced Tax Questions --> Worthless Partnership Interest
Discussion Forum Index --> Tax Questions --> Worthless Partnership Interest

Wamark (talk|edits) said:

20 October 2009
My client invested in a partnership as a limited partner to buy and develop land. In 2008, the bank foreclosed on the land. The partnership dissolved in 2008 and my client lost his entire investment.

He received a 2008 K1 from partnership that shows:

Marked as final K1 Ordinary loss of $35,000 Partner’s share of recourse debt $380 Partner’s ending Capital Account $35,000

I don’t understand the accounting on the final K1. It seems like his capital account should have been reduced to zero thru a loss.

Regardless, I want to take an ordinary loss for the remaining balance in his capital account for a loss on his worthless interest.

In researching the subject it seems that the requirements are pretty strict to be able to do that.

Given the entries on the K1 can I take an ordinary loss for a worthless partnership interest in 2008?

Michaelstar (talk|edits) said:

20 October 2009
Based on the K-1 you received and your post - my answer would be No - you will not be able to take an ordinary loss for this ending capital account. See Rev. Rul. 93-80.
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