Question

Reporting a final K-1 for a fund that distributed private company stock after IPO?

Forum|Forum|6 years ago
March 2, 2020
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I received a final K-1 from a fund that invested in a company (Slack) that went public last year. The fund solely held Slack shares purchased on the secondary market and individual investors were LPs. When Slack went public, I received the shares in a brokerage account.

The K-1 shows a withdrawal equal to the original amount I invested and zero profit/loss. When entering the K-1 in TurboTax, one of the questions asks whether I disposed of my entire interest in the partnership, but the help text says in-kind transfers are not considered dispositions. When the fund distributed Slack stock upon IPO, did ownership in the fund convert in-kind to Slack stock, hence no taxable event?

I’m confused because much of the K-1 fields on my return mention selling my stake in the partnership (I don’t think I did this but please correct me if wrong).

How do I report this on my return, specifically around the section that asks if this was the final K-1? Is it correct just to mark that the partnership ended, or do I need to say that I disposed of my interest in the fund?

Not A Product Question

A

Anonymous

you basis in the stock is your basis in the partnership. you can show selling the partnership for the basis in the securities (see below) + any cash received and use what you put in as the cost. the final k-1 would show an amount on box 19A.

here are IRS instructions for this

Box 19. Distributions
Code A. Cash and marketable securities.

If you received the securities in liquidation of your partnership interest (you did), your basis in the marketable securities is equal to the adjusted basis of your partnership interest reduced by any cash distributed in the same transaction and increased by any gain recognized on the distribution of the securities.

if there was any gain to recognize, the partnership would have to provide you with that info