Now you are ready to determine your overall gain or loss. If you still have a positive basis after adjusting for the final K-1 and liquidating distribution, then this is a long term capital loss. If your basis is negative, then you have a long term capital gain to the extent of the negative figure.
These amounts are reported on Schedule D and the applicable form Make sure you indicate in the K-1 input area that this is the final K A couple of questions: 1 Have you maintained a basis schedule of your investment?
What box is checked? Is your beginning capital positive or negative? Thanks for the quick response! This is the first time I have closed out a K1. Here are answers, as best I can give them: 1 No - but I know the original investment and I have all the K1s. I presume that is what is tracked in section L of the K1.
I also have the annual accounting statements, somewhere, on file. I think. Thanks in advance for the help. If it's no go so be it. Thanks Rick. Very useful. Kind of annoying that the REIT didn't do the work.
Level 1. Thanks for your help. In Rev. In that ruling, a corporation, which was the general partner in a partnership, incurred syndication costs in connection with an offering of the partnership's interests. The IRS cited Rev. The partnership was then treated as paying the syndication costs and was required to record the syndication expenditures as an intangible asset on its balance sheet.
Thus, in many situations in which a partner incurs syndication costs on behalf of a partnership, the partnership will be treated as paying those costs for federal income tax purposes. The partner instead is treated as making a capital contribution to the partnership in an amount equal to the syndication costs it incurred on the partnership's behalf.
Impact on outside basis and capital accounts. What are the consequences to a partnership where it is deemed to make an expenditure for syndication costs that were paid on its behalf by a partner? From the partnership's perspective, it receives cash from its partner as a capital contribution, pays the syndication costs, and capitalizes those costs as an intangible asset on its balance sheet.
The next consideration is the effect the deemed capital contribution and partnership-level expenditure have on the partner's basis in its partnership interest and the partnership's Sec. Under Sec. The IRS expressly confirmed this conclusion in Rev. A partnership that maintains capital accounts in accordance with the Sec.
In certain circumstances, additional analysis may be needed to accurately identify the partner that is treated as funding syndication costs through a capital contribution. Consider the following example:. Although GP pays the syndication costs in the example, it does not actually bear the economic burden of those costs due to its rights to reimbursement from PRS.
Even though GP paid cash to the provider, PRS is treated as paying the syndication costs, and the impact of those expenditures should be reflected in the limited partners' capital accounts. Careful analysis of the partnership agreement or other relevant documents is necessary to correctly identify the partner who bears the economic burden of syndication costs paid by or on behalf of a partnership. The impact on basis is different from a capital account. As discussed above, a partner's initial tax basis and capital account reflect any deemed capital contributions for syndication costs borne by the partner on behalf of the partnership.
Unlike a capital account, though, a partner's basis in its partnership interest is generally not affected when the partnership is treated as the payer of the syndication costs. Although Sec. However, a different result occurs for purposes of Sec. A partner's Sec. Thus, Sec. Tami Davidman is an Audit Partner with experience managing engagement teams that perform audit services for clients in a variety of industries, including life sciences, financial services, and employee benefit plans.
He also provides tax compliance, planning, and advisory services to high net worth individuals and families. The entities falling under the EisnerAmper brand are independently owned and are not liable for the services provided by any other entity providing services under the EisnerAmper brand.
Skip to nav Skip to content. Explore Knowledge Center. It can be more advantageous to not make the election in some scenarios.
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