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taxpayer's final K-1 has negative ending capital

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Level 3

Taxpayer received final K-1 (limited partner) that have negative ending capital balance.  Taxpayer did receive $119 distribution during the year.  But, Partnership was sold and he did not receive any residual from the buyer.

1. do I report $119 as capital gain distribution?  If yes, where to input this?

2. do we need to report ~$3k negative capital as gain?

 

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Distributions in excess of basis do go on Schedule D, yes.

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4 Replies 4
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You just run everything through the usual basis calculations. Your guy likely has distributions in excess of basis and/or losses suspended for lack of basis.

Capital account is not necessarily indicative of basis.

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Level 3

So, we need to report $119 excess distribution through long-term capital gain in Sch D?

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Distributions in excess of basis do go on Schedule D, yes.

View solution in original post

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Level 3

thanks.

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