Final K1

Forum|Forum|3 years ago
February 17, 2023
1 reply
0 views

We closed our 1065 partnership end of 2022. Generated final k1s. In the 1040 TT has the Additional Information Sheet which asks about the disposition of the partnership in Part II. It wants you to choose 1a or b or c. None of the choices are applicable. We just closed it. I tried the "abandoned" box but 1a, b, c are still highlighted. Line 4 "how acquired" choices are purchased, inherited or gifted - Non applicable. We started the business ourselves. If you pick anything then line 4 and 7 are highlighted. I'm a bit frustrated.

Rick19744

Employee

Don't get hung up in the nomenclature.

Not sure what the various options are, but most likely you will just need to indicate you "sold" it.

As a result:

TT will ask a number of questions.
TT will need to know the "selling" price. This amount will be the liquidating distribution received upon liquidating the partnership.
TT will need to know your tax basis in your partnership interest. Hopefully you have this.
TT will need to know if any of the gain is subject to Section 751 recharacterization. This applies to what is known as hot assets, which includes your share of depreciation recapture.
TT will need to know if any of the gain is related to unrecaptured Section 1250 property. This would be reported on the K-1 if applicable.
Once the above is input into TT, TT will handle the rest.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.