Final K-1( Form 1065) disposition

Forum|Forum|5 years ago
March 12, 2021
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I invested in a real estate limited partnership (not a PTP). The partnership was basically a group of individual investors that created a fund that bought and sold property (land), housing developments and rental income. The partnership sold all of the properties in the fund and is ending the partnership fund. This partnership fund will now no longer exist. In TurboTax I can check one of four boxes; No entry, Complete Disposition, Disposition not via a sale, Sold and receives payments. Which box should be checked?

Best answer by Anonymous_

If you select any option other than No entry or Disposition not via a sale, you will be prompted to enter a sales price (which is apparently inapplicable).

Anonymous_Answer

Employee

If you select any option other than No entry or Disposition not via a sale, you will be prompted to enter a sales price (which is apparently inapplicable).

gustj012

I have a similar situation (received a final K-1 1065 from a partnership), which reports final earnings/expenses from 2020 tax year. In 2020 the partnership management sold off all remaining assets, effectively liquidating the business, and this K-1 reflects the final reporting of gains and losses attributable to partners based on their relative ownership %. There was no independent sale by me as a partner to sell to sell my portion of the partnership to a third party, therefore no sale date/sales price to report. Therefore initially I agree that in the TT program I need to fill the radio button for No Entry. (the option for Disposition not via sale triggers a screen to enter purchase date & sale date)! However, when using the "no entry" TT does not record that the K-1 is a final K-1 (based on viewing the K-1 in forms view). And that seems incorrect. But if I manually check the " final" box in forms view, then go back to step-step, including running Smart Check....smart check then notes an error where it is looking for information about disposition as a sale, which is also incorrect. Catch-22???

karinm1971

Have you solved this? I have a similar situation.

tkj99

I would say complete disposition. This would assume no property remains and all remaining assets (cash) have been distributed to the former LLC members. The K-1's should show any gains and losses from the disposal of the investment properties.

karinm1971

I would just add that, although yes the final K-1 will show gain/losses from disposal of the investment, you still need to figure your actual gain/loss yourself by subtracting the adjusted basis (that you've been tracking year by year) from the sale proceeds.

The partnership people who issue the K-1 won't know what your adjusted basis is (necessarily), which is what determines your tax liability from the sale.

Karin