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Hello and thanks for your tax question today. My name is XXXXX XXXXX I will be assisting you.
A few questions first. How much of a loss did you have from this activity?
How much are your total capital losses from all sources?
How much are your capital gains for the year?
If you can please stay online, it will make it easier and quicker to respond to your questions. Thanks.
47,628 loss for this activity
DId you have any other gains or losses?
capital gain of 41,253
Where did you report this S165 loss?
form 1065 K-1
What line of the K-1 has this item?
Line 9a is a regular capital loss.
How did you decide this was S165?
A S165 loss is a casualty loss, not a capital loss.
the partnership sent me a k-1 in the detail, it has a gain of 1,220 from portfolio activities and a loss from pass through entities for a total net long term capital loss of 47642. Those are the specific wordings and amounts they used?
9a says its for net long term capital gains
OK. Noting in that phrase indicates a S165 type loss.
So this sounds like an ordinary LT capital loss.
yes, it says in the footnotes for 9a "your share of IRC sec 165 loss preported on line 9A is (48,862)
As I stated previously, a S165 loss is NOT the same as a LT Cap Loss. Do you know exactly what caused this loss?
This is important because they are treated COMPLETELY different on a tax return.
If you try to put a S165 loss through as a capital loss item, TurboTax will have no way to determine the correct procedure to handle this.
unsure of the official type. It essentially dissolved and shut down I believe.
That would NOT sound like a S165 loss unless there was specifically fraud involved
I have a form 8886 that the partnership sent that says in item 7a that it is a capital loss
Sounds like the first step is to determine from the PARTNERSHIP what happened.
There is no Line 7a on a partnership K-1
Then everything you are telling me points to an ordinary capital loss, not a Section 165 casualty loss.
line 7a of form 8886 that they included for those individuals who meet the threshold amounts of reportable loss transactions. I don't believe I qualify, but they sent the form as an example for those that do, I guess.
Just to see what is coming out, what is on Form 1040, Line 13?
a gain of 41,253 which I believe to be my capital gains for my stock and mutual fund investments. I was hoping to put the partnership losses against this.
Form 8886 is used when the partnership is a tax shelter.
I cannot see anywhere in the return that I am getting credit for the loss on the partnership
That definitely does not apply
OK, so the K-1 shows Box 9a as a loss.
Now a few more questions....
Is your AGI over $150K?
How many K-1s do you have total?
ah, more detail. This was a "disposal of the partnerships stock investment in an entity for no proceeds"
Yes, AGI is over 150, I have 5 or 6 partnerships
Is this loss a passive investment?
What was the TOTAL GAIN in all passive investments for the year?
and how much gain was in NON-PASSIVE partnerships?
is there an easy way to find that? I don't have any non passive partnerships
OK, are you looking at a printout of your tax return so far? Or are you on the computer looking at forms mode?
it lists 4 partnerships, but is not including the one in question. total passive loss (4753), total passive gain 12,888
but that is for the 4 other partnerships, the one in question is not listed for some reason?
looking at schedule E
There is only room for 4 on the form. The rest are listed on an additional page
Are you in the program?
oh, I had to scroll down
OK, let's go to Forms mode if you are not already in it. There is a button top right corner to go to forms mode. See it?
it shows for the partnership in question, nothing for f g h I or j columns?
yes, I am in forms. I think I am good to go.
OK, let's start in the left panel and click on the Form 1040. That's where I would like to start please
its showing no loss for the partnership.
In the right panel, please tell me the amounts on lines 13, 14 and 17
of form 1040?
yes form 1040
line 13 41,253
line 14 11
line 17 8,146
I'd like to know if you had any capital gains or losses NOT from the partnerships...such as from a brokerage account
yes absolutely - gains
OK. So here, in lay-terms, is the basic scenario so you know what I am looking for
lay it on me...
The capital LOSSES will only offset capital GAINS. It will NOT offset any PARTNERSHIP income reported on Lines 1 or 2 of the K-1s
got it, but I think most of the gains were capital gains.
So, what we need to find is if your capital GAINS, in total, were in the range of $90K+/- before we applied the $48K loss
is there an easy way to find that?
This means capital gains from the brokerage as well as boxes 9a/b/c from the partnerships
Go to Line 13 of the 1040. Click on it to fgind a magnifying glass. Then click the magnifying glass
THis takes us to Sch D
Tell me when you are there
I am at sched d
How much is on Lines 1,2 and 3?
RIGHT hand column
ST loss of 15,051
for line 1, nothing for 2 or 3
OK and LIne 5?
So Line 7 is around -15059 ?
but that is short term, this is a long term loss
OK, no Lines 8-9-10
nothing for 8, -523 for 9 and nothing for 10
OK, now the big one....Line 12
there better be a big number here.....Or we have to go fishing....
that is big for me!
you are pretty good at this!
So if you were to flip through all those K-1s, can you tell me each of the POSITIVE numbers on LINES 9a ONLY.
line 13 is 10,306 in case you were wondering
I am expecting to see a number over $100K
yes, give me a sec
ah, yes, you are right. BUMMER! I have one with 94,023
Its offsetting some of that, huh? I did not make the connection as I did not see any income from it!
It's OK....you have to know how to dance around the tax return :)
(Or I have x-ray vision!)
So, in summary, the losses are being taken into consideration.
Well done. so that's it huh? Thanks so much for your help!
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Thank you very much and have a good day!
absolutely. Thank you!