Partnership Form 1065 With Losses

Forum|Forum|4 years ago
April 15, 2022
2 replies
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I received a K-1 from the LLP I am a partner of. The K-1 reports a net income loss. Once I enter the K-1 into Turbotax, the loss does not get reported on a Schedule E or my 1040. I'm looking for advice on getting the losses reported on my return.

Mike9241

as a limited partner, the loss is passive, which means you get no current deduction. look at form 8582.

TedDalyAuthor

Thanks for the reply. Not sure if it makes any difference but I’m a general partner and not a limited partner. If you have any insight on that difference it would be greatly appreciated

Rick19744

Employee

A couple of comments:

I can't speak for all states, but in most states, an LLP is a type of general partnership.
I would assume that on your K-1 box G is checked as general partner or LLC member-manager
I believe when you went through the question and answer for inputting your K-1 information you indicated this was a limited partnership and you were a limited partner. You should change that response to general partnership and general partner.
There is also most likely a question asking if you are "at-risk" for the loss. I am assuming you are and you should respond "yes" to that question.
I also assume that you are maintaining a tax basis schedule of your investment in the LLP. This is key in determining if losses are allowable, impact of distributions and the overall gain or loss upon disposition.

*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.

TedDalyAuthor

Thanks for your reply Mark.

I live in Minnesota and it is a general partnership
The K-1 is marked as a general partnership
In Turbotax, I have marked that I am a general partner and it is a general partnership
I marked "yes" that I am at risk for the loss.
I will double-check to make sure that I have a tax basis schedule properly filled out.

Follow-up question, Are there other limitations (like income level) that may be affecting whether the losses are allowable?

Rick19744

Employee

Follow up response:

The only other item that may be limiting the loss is if you have indicated that you are not a material participant
If you are a general partner, are at-risk, and are a material participant, then TT should not be limiting any loss and income level would not impact the loss limitation based on your facts.
Just check the wording on the "at-risk" question to make sure it is answered correctly.
You don't indicate what method of TT you are using. If downloading the software, just make sure you have the latest version.

*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.