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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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losses

Customer Question

I invested in 4 investments that went belly up, what form do I enter them in TUrbo Tax Premier
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

What was the nature of the investments? How were they organized? partnerships? corporations?


Please provide the requested information so that a proper response can be given.


[email protected]  
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: Limited Partnerships, that I was investing to have extra income for retirement.

Jet Charter Service
Terminals for parying Cell phone, Cable TV, etc...
National Audit Defense - Tax organization for protection and help with Income Taxes.
COllectible Stamps that are not and can not be located anymore.
Expert:  Jon Andrews replied 11 years ago.

If these investments were made inside an IRA or other retirement account, they are not deductible. If they were not, the post below explains how to record them on your individual return.


You should have recieved a Schedule K-1. This is the form that partnerships use to inform the partners of the tax transactions for the year. Whatever is shown on the K-1 is presumed by the IRS to be the correct amounts for income, deductions, profits, losses, etc.


If you did receive the K-1's, you should enter the information in the K-1 entry screen.


If you did not receive a K-1, you should first attempt to contact the sponsors of each aprtnership and find out if/when the K-1's will be available. If you cannot contact them because they are out of business, you have several choices. 1. File an extension and hope that you eventually get a K-1. 2. Treat the investments as if you did get a K-1 and it showed a loss equal to your investment. 3. Treat the investments as a capital loss with 0 proceeds from sale. 4. Any number of variations of the first three.


The danger in using either 2 or 3, is that you don't really have anything to back up the specific treatment that you choose and the IRS could disallow whatever treatment you use. Depending on the dollar amounts, this could lead to significant penalties.


My suggestion would be that if these were significant investments given your overall financial situation, you should seek competent counsel, a tax attorney or CPA, and have a face to face meeting to discuss the various issues.


[email protected]

Customer: replied 11 years ago.
Reply to Jon Andrews's Post: Thank you, XXXXX XXXXX sure there will be no K-1's from these LLC, because they are all under investigation for scams.

I also invested in an oil wells, that finally started producing in 2004. I have gotten the K-1's, but I am not sure what form the depeletion gets deducted on?? Can I spread the income from the oil wells over a few years as I understood when I invested.

Thanks,      
Customer: replied 11 years ago.
What form do I deduct or enter the depeletion from an oil well I invested in 2003 that finally started producing and sending monthly dividends. I have gotten the K-1's, but someone also mentioned spreading out the income over a few years from this.
Expert:  Jon Andrews replied 11 years ago.

I think somebody misled you with regard to "spreading the income over a few years" on oil wells. You will get depletion and you probably should have gotten a deduction for "intangible drilling costs" as well. All of that will be reported on Schedule E if you are receiving a K-1. If you are not receiving a K-1 on the oil wells, they would be reported on Schedule C (assuming that they are working interests).


If you are sure that you are not going to receive K-1's on the other ventures, you are back to deciding whether to take them as "ordinary losses", which would be option 2 in my previous post, or capital losses which would be option 3 in my previous post. I am really not in a position to advise you as to which would be better or more reasonable in your particular circumstances, but i would be happy to try to help you decide.


[email protected]
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: Thanks, XXXXX XXXXX really like to have you help me with this decision.

I entered the info in Turbo Tax from my K-1's, but I do not see where I enter the depletion.
About 3564.00.
Expert:  Jon Andrews replied 11 years ago.

I am not sure about the TurboTax entry screens, but there should be a line that allows you to enter "other income" or "other loss". It may be called "other deductions". That is where I would put it. If there is not such a line on the K-1 entry screen, open a second K-1 entry screen and put in the same information except where it asks for the "name" of the partnership put "XYZ partnership - depletion" and then enter the amount as a negative in the "ordinary income" box.


jon 

Customer: replied 11 years ago.
WHAT FORM DO YOU ENTER THE DEPLETION ON??
Expert:  Jon Andrews replied 11 years ago.

It goes on Schedule E.


jon

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