Table of Contents
- Publicly Traded Partnership (PTP)
- Partner's Share of Liabilities
- Boxes 1 Through 9
- Box 1. Taxable Income (Loss) From Passive Activities
- Box 2. Taxable Income (Loss) From Other Activities
- Box 3. Qualified Dividends
- Box 4a. Net Capital Gain or (Loss) From Passive Activities
- Box 4b. Net Capital Gain or (Loss) From Other Activities
- Box 5. Net Passive AMT Adjustment
- Box 6. Net Other AMT Adjustment
- Box 7. General Credits
- Box 8. Low-Income Housing Credit
- Box 9. Other
If the “publicly traded partnership” box is checked, you are a partner in a publicly traded partnership (PTP) and must follow the rules under Publicly traded partnerships discussed above.
The partnership will show your share of the partnership's nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other liabilities as of the end of the partnership's tax year. If you terminated your interest in the partnership during the tax year, the amounts should reflect the share that existed immediately before the total disposition. A partner's “other liability” is any partnership liability for which a partner is personally liable.
Use the total of the three amounts for computing the adjusted basis of your partnership interest.
Generally, you can use only the amounts shown next to “Qualified nonrecourse financing” and “Other” to figure your amount at risk. Do not include any amounts that are not at risk if such amounts are included in either of these categories.
If your partnership is engaged in two or more different types of activities subject to the at-risk provisions, or a combination of at-risk activities and any other activity, the partnership should give you a statement showing your share of nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other liabilities for each activity.
See Pub. 925 for more information on qualified nonrecourse financing.
Both the partnership and you must meet the qualified nonrecourse rules on this debt before you can include the amount shown next to “Qualified nonrecourse financing” in your at-risk computation.
See Limitations on Losses, Deductions, and Credits beginning on page 2 for more information on the at-risk limitations.
The amounts shown in boxes 1 through 9 reflect your share of income, loss, deductions, credits, etc., from the partnership. These amounts do not take into consideration the following limitations.
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The adjusted basis of your partnership interest.
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The amount for which you are at risk.
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The passive activity limitations.
For information on these provisions, see Limitations on Losses, Deductions, and Credits beginning on page 2.
For individuals, the following instructions explain how to report the amounts shown in the boxes. For all other entities, report the amounts in the boxes as instructed on your income tax return.
The line numbers in these instructions are references to forms in use for calendar year 2007. If you file your tax return on a calendar year basis, but your partnership files a return for a fiscal year, enter the amounts shown in the boxes on your tax return for the year in which the partnership's fiscal year ends. For example, if the partnership's tax year ends on June 30, 2008, report the amounts in the boxes on your 2008 income tax return.
If you have losses, deductions, or credits from a prior year that were not deductible or usable because of certain limitations, such as the basis rules or the at-risk limitations, take them into account in determining your net income, loss, or credits for this year. However, except for passive activity losses and credits, do not combine the prior-year amounts with any amounts shown on this Schedule K-1 to get a net figure to report on any supporting schedules, statements, or forms attached to your return. Instead, report the amounts separately on the attached schedule, statement, or form on a year-by-year basis.
For amounts other than those shown on Schedule K-1, enter each item on a separate line of Part II of Schedule E (Form 1040).
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If income is reported in box 1, report the income on Schedule E (Form 1040), line 28, column (g). However, if the PTP box is checked, report the income following the rules for Publicly traded partnerships on page 5.
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If a loss is reported in box 1, follow the Instructions for Form 8582 to figure how much of the loss can be reported on Schedule E (Form 1040), line 28, column (f). However, if the PTP box is checked, report the loss following the rules for Publicly traded partnerships.
This amount is not subject to the passive activity limitations. Report the amount as follows.
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If the amount is income, report it on Schedule E (Form 1040), line 28, column (j).
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If the amount is a loss, report it on Schedule A (Form 1040), line 28.
Report this amount on lines 9a and 9b of Form 1040.
Note.
Qualified dividends are excluded from investment income, but you can elect to include part or all of these amounts in investment income. See the instructions for line 4g of Form 4952, Investment Interest Expense Deduction, for important information on making this election.
Net capital gain or (loss) from other activities is not subject to the passive activity limitations. Report the gain or (loss) on Schedule D (Form 1040), line 12, column (f).
Individual general and limited partners should enter this amount on line 15 of Form 6251.
Limited partners only. Enter this amount from box 7 on line 1x of Form 3800, General Business Credit. Because general credits are treated as being from a trade or business that is a single passive activity, you must also include the box 7 amount on line 3 of Form 3800.
Limited partners only. Enter this amount on line 4 of Form 8586, Low-Income Housing Credit. This credit is treated as being from a single passive activity.
General partners in an ELP must separately account for any items attributable to passive loss limitation activities to the extent necessary to comply with the section 469 passive loss rules. Therefore, the partnership is required to report income or (loss), capital gain or (loss), 28% rate gain or (loss), credits, and the alternative minimum tax adjustment separately for all trade or business activities, rental real estate activities, and rental activities other than rental real estate.
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Report any income on Schedule E (Form 1040), line 28, column (g). However, if the PTP box on Schedule K-1 is checked, report the income following the rules for Publicly traded partnerships.
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Report a loss following the Instructions for Form 8582 to figure how much of the loss can be reported on Schedule E (Form 1040), line 28, column (f). However, if the PTP box is checked, report the loss following the rules for Publicly traded partnerships.
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If you have a loss from a passive activity in box 9, Code B1, and you meet all of the following conditions, enter the loss on Schedule E (Form 1040), line 28, column (f).
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You actively participated in the partnership rental real estate activities. See Special allowance for rental real estate activities on page 4.
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Rental real estate activities with active participation were your only passive activities.
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You have no prior year unallowed losses from these activities.
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Your total loss from the rental real estate activities was not more than $25,000 (not more than $12,500 if married filing separately and you lived apart from your spouse all year).
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If you are a married person filing separately, you lived apart from your spouse all year.
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You have no current or prior year unallowed credits from a passive activity.
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Your modified adjusted gross income was not more than $100,000 (not more than $50,000 if married filing separately and you lived apart from your spouse all year).
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If you have a (loss) from a passive activity in box 9 and you do not meet all the conditions in 1 above, report the loss following the Instructions for Form 8582 to figure how much of the loss you can report on Schedule E (Form 1040), line 28, column (f). However, if the PTP box is checked, report the loss following the rules for Publicly traded partnerships.
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If you were a real estate professional and you materially participated in the activity, report box 9 income or (loss) on Schedule E (Form 1040), line 28, column (h) or (j).
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If you have income from a passive activity in box 9, Code B1, enter the income on Schedule E (Form 1040), line 28, column (g). However, if the PTP box is checked, report the income following the rules for Publicly traded partnerships.
The 28% gain or (loss) from other activities is not subject to the passive activity limitations. Include it on line 4 of the 28% Rate Gain Worksheet on page D-8 of the Instructions for Schedule D (Form 1040).
Generally, these amounts are not passive income. Report them on Schedule E (Form 1040), line 28, column (j) (for example, guaranteed payments for personal services).
The amount reported under Code G is excluded from your gross income to the extent provided in section 108 if the discharge:
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Occurred in a title 11 case relating to bankruptcy,
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Occurred when you were insolvent,
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Involved qualified farm indebtedness, as defined in section 108(g), or
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Involved qualified real property business indebtedness, as defined in section 108(c)(3), unless the partner is a C corporation.
This amount is applied, instead, to reduce certain tax attributes. File Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, to explain why any amount received from the discharge of indebtedness should be excluded and to report your reduction of tax attributes.
For a discharge of indebtedness not described above, you must include this amount in income on Schedule E (Form 1040), line 28, column (g) or (j).
Report on your income tax return, as an item of information, your share of the tax-exempt interest received or accrued by the partnership during the year. Individual partners must include this amount on Form 1040, line 8b. Increase the adjusted basis of your interest in the partnership by this amount.
Limited partners only. Report this amount on line 1k of Form 3468. Because the credit is treated as being from a single passive activity, you must also file Form 3800.
Use the information reported under Codes K1 through K9 to figure your foreign tax credit. For more information, see Form 1116, Foreign Tax Credit (Individual, Estate, or Trust) and its instructions; Form 1118, Foreign Tax Credit—Corporations, and its instructions; and Pub. 514, Foreign Tax Credit for Individuals. See page 5 of the Instructions for Form 1116 for detailed instructions for reporting foreign tax information from partnerships.
Note.
The line references in this section of the Form 1116 instructions do not apply to the Schedule K-1 of Form 1065-B.
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Code K4(a). Passive category foreign source income.
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Code K4(b). General category foreign source income.
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Code K4(c). Other foreign source income.
Note.
For Codes K5 and K6, do not include any expenses allocated and apportioned to U.S. source income on any line of Part I of Form 1116.
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Code K7(a). Deductions allocated and apportioned at partnership level to passive category foreign source income.
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Code K7(b). Deductions allocated and apportioned at partnership level to general category foreign source income.
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Code K7(c). Deductions allocated and apportioned at partnership level to other foreign source income.
Generally, oil and gas income, deductions, credits, and other items are included in your distributive share of income or loss from passive loss limitation activities, general credits, and the alternative minimum tax adjustment.
However, distributive shares of all oil and gas income, deductions, credits, and other items are separately reported to partners who are disqualified persons in accordance with the regular partnership rules, here or on an attached schedule.
Note.
A partner must notify the ELP of its status as a “disqualified person”.
Reminder.
A partner is required to notify the partnership of its tax-exempt status.
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The FMV of the marketable securities when distributed (minus your share of the gain on the securities distributed to you).
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The partnership's adjusted basis of those securities immediately before the distribution.
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The partnership's adjusted basis in the securities immediately before the distribution increased by any gain recognized on the distribution of the securities or
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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.
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The partnership's adjusted basis immediately before the distribution or
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The adjusted basis of your partnership interest reduced by any cash distributed in the same transaction.
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The name of the corporation that issued the QSB stock,
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Your share of the partnership's adjusted basis of the QSB stock,
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Your share of the partnership's sales price of the QSB stock, and
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The dates the QSB stock was bought and sold.
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You must have held an interest in the partnership when the partnership acquired the QSB stock and at all times thereafter until the partnership disposed of the QSB stock.
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Your distributive share of the eligible section 1202 gain cannot exceed the amount that would have been allocated to you based on your interest in the partnership at the time the QSB stock was acquired.
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The name of the corporation that issued the qualified small business (QSB) stock,
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Your share of the partnership's adjusted basis of the QSB stock,
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Your share of the partnership's sales price of the QSB stock,
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The dates the QSB stock was bought and sold,
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Your distributive share of gain from the sale of the QSB stock, and
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Your distributive share of the gain that was deferred by the partnership under section 1045.
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You must have held an interest in the partnership during the entire period in which the partnership held the QSB stock (more than 6 months prior to the sale) and
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Your distributive share of the gain eligible for the section 1045 rollover cannot exceed the amount that would have been allocated to you based on your interest in the partnership at the time the QSB stock was acquired.
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The name of the corporation that issued the qualified small business (QSB) stock,
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Your share of the partnership's adjusted basis of the QSB stock,
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Your share of the partnership's sales price of the QSB stock,
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The dates the QSB stock was bought and sold, and
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Your distributive share of the gain from the sale of the QSB stock.
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You must have held an interest in the partnership during the entire period in which the partnership held the QSB stock (more than 6 months prior to the sale),
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Your distributive share of the gain eligible for the section 1045 rollover cannot exceed the amount that would have been allocated to you based on your interest in the partnership at the time the stock was acquired, and
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You must purchase other QSB stock (as defined in the Instructions for Schedule D (Form 1040)) during the 60-day period that began on the date the QSB stock was sold by the partnership.
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The name of the corporation that issued the QSB stock.
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The name and EIN of the selling partnership.
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The dates the QSB stock was purchased and sold.
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The amount of gain that is not recognized under section 1045.
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If a partner purchases QSB stock, the name of the corporation that issued the replacement QSB stock, the date the stock was purchased, and the cost of the stock.
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If a partner treats the partner's interest in QSB stock that is purchased by a purchasing partnership as the partner's replacement QSB stock, the name and EIN of the purchasing partnership, the name of the corporation that issued the QSB stock, the partner's share of the cost of the QSB stock that was purchased by the partnership, the computation of the partner's adjustment to basis with respect to that QSB stock, and the date the stock was purchased by the partnership.
Report this gain on line 11 of the Unrecaptured Section 1250 Gain Worksheet on page D-9 of the Instructions for Schedule D (Form 1040). Do not report the gain on line 5 as stated on the worksheet.
Note.
Upon request, the partnership should furnish you a copy of the partnership's Form 8873 if there is a reduction for international boycott operations, illegal bribes, kickbacks, etc.
The partnership must provide a statement showing the amounts of each type of income or gain that is included in inversion gain. The partnership has included inversion gain in income elsewhere on Schedule K-1. Inversion gain is also reported under Code P because your taxable income and alternative minimum taxable income cannot be less than the inversion gain. Also, your inversion gain (a) is not taken into account in figuring the amount of net operating loss (NOL) for the tax year or the amount of NOL that can be carried over to each tax year, (b) may limit the amount of your credits, and (c) is treated as income from sources within the U.S. for the foreign tax credit. See section 7874 for details.
Follow the Instructions for Form 8582 for commercial revitalization deductions from rental real estate activities to figure how much of the deduction can be reported on Schedule E (Form 1040), line 28, column (f).
A corporate partner is required to treat its distributive share of interest income, interest expense, and partnership liabilities as income, expense, and liabilities of the corporation for purposes of the interest deduction limitation under section 163(j). The corporation's distributive share of interest income is reported in box 9 using code R1. Its distributive share of interest expense is reported using code R2. The amounts reported using code R1 and R2 are for information only, and are included in amounts reported elsewhere on Schedule K-1. The corporation's distributive share of partnership liabilities is shown in the first column of Schedule K-1.
The partnership must attach a statement to Schedule K-1 that provides the information you need to figure the domestic production activities deduction. Use Form 8903, Domestic Production Activities Deduction, to figure this deduction. See the Instructions for Form 8903 for details.
Report the QPAI reported to you by the partnership (in box 9 using code S2) on line 7 of Form 8903.
Report the portion of W-2 wages reported to you by the partnership (in box 9 using code S3) on line 15 of Form 8903.
This is compensation to partners deferred under a section 409A nonqualified deferred compensation plan that does not meet the requirements of section 409A. This amount is also reported in box 9 using Code F. This amount is subject to interest and additional tax to be reported on line 63 of Form 1040. See the instructions for line 63 of Form 1040 for details.
The partnership will use Code U to report the following to partners.
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The recapture of any credit (other than the low-income housing credit or investment credit) is reported to you as a separately stated item. See the instructions for the specific form identified with the credit for more information on reporting the recapture.
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Any information a partner that is a publicly traded partnership may need to determine if it meets the 90% qualifying income test of section 7704(c)(2). Partners are required to notify the partnership of their status as a publicly traded partnership.
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The partnership will report any information you need to complete a disclosure statement for reportable transactions in which the partnership participates. If the partnership participates in a transaction that must be disclosed on Form 8886, Reportable Transaction Disclosure Statement, both you and the partnership may be required to file Form 8886 for the transaction. The determination of whether you are required to disclose a transaction of the partnership is based on the category(s) under which the transaction qualifies for disclosure and is determined by the partnership. See the Instructions for Form 8886 for details.
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Any other information you may need to file with your return not shown elsewhere on Schedule K-1. The partnership must give you a description and the amount of your share for each of these items.
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