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Basis and excess distribution

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Level 2

Hello everyone!

i am working on a 1040 return where the k1 has distributions in excess of basis. I am taking the excess amount as LTCGs. I was wondering if i can take the same amount as "contributions to basis" since that amount is being taxed?

Thanks for your time.

 

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Level 10

Indirectly that's already what you're doing.  Say you have a $10K distribution in excess of basis.  Normal distribution rules would have you deduct the $10K from the basis of $0, leaving you with a basis of -$10K.  By correctly reporting this on Schedule D, you are adding $10K to the basis of -$10K to bring it up to $0.

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Highlighted
Level 10

Indirectly that's already what you're doing.  Say you have a $10K distribution in excess of basis.  Normal distribution rules would have you deduct the $10K from the basis of $0, leaving you with a basis of -$10K.  By correctly reporting this on Schedule D, you are adding $10K to the basis of -$10K to bring it up to $0.

View solution in original post