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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 967
Experience:  Certified Public Accountant
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I am doing a partnership which declared chapter 11 so the

Customer Question

i am doing a partnership which declared chapter 11 so the cancellation of debt shows on the k-1 but as individuals they also filed chapter 11 when i put this on my k-1 it is taxing it. Do i just put it on a 982 personally cause if i put it on the k-1 it becomes taxable to the partner
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: no
Submitted: 4 months ago.
Category: Tax
Expert:  Mark Taylor replied 4 months ago.

Hi, my name is Mark. I will be happy to help you with your questions.

Expert:  Mark Taylor replied 4 months ago.

I assume that this is an LLC?

Customer: replied 4 months ago.
no it is not
Expert:  Mark Taylor replied 4 months ago.

just a partnership.

Customer: replied 4 months ago.
Expert:  Mark Taylor replied 4 months ago.

You are correct that the COD income would flow through to each partner's K-1 based on the partnership agreement. Yes, if the individual partner filed a chapter 11 bankruptcy then this amount would be excluded from income.

Expert:  Mark Taylor replied 4 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Expert:  Mark Taylor replied 4 months ago.

Please let me know if you have any other questions or need clarification. I am happy to help.

Customer: replied 4 months ago.
my computer system is taxing the COD if I input it on the k-1 so i don't know if i should just not show it or how to get it off
Expert:  Mark Taylor replied 4 months ago.

It should be on the K-1. You should adjust for it on Form 982. I assume that you mean leave it off when your inputting the K-1 in the individual return.

Customer: replied 4 months ago.
would it matter that the 1065 has a loss
Expert:  Mark Taylor replied 4 months ago.

The 1065 loss will not have an impact to the COD treatment

Customer: replied 4 months ago.
if i put it on the k-1 it lowers the loss even if i put it on a 982 it is lowering the loss
Expert:  Mark Taylor replied 4 months ago.

Can you give me approximate numbers. For instance what is the loss of the partnership? What is the COD income?

Customer: replied 4 months ago.
15,ooo loss 5000 cod his wages is 30000 unemployment is 10000
Expert:  Mark Taylor replied 4 months ago.

Ok so the COD is changing the loss to $10,000?

Customer: replied 4 months ago.
yea it is
Expert:  Mark Taylor replied 4 months ago.

Ok the cancellation of debt income should be reported on Box 11 E of the K-1 and should not impact the ordinary loss of the partnership.

Customer: replied 4 months ago.
ok thats what i thought now to figure out why it is I guess is the problem and you can't help with that. so thank you for just confirming my thoughts
Expert:  Mark Taylor replied 4 months ago.

It sounds like it is hitting the wrong box on the k-1. You are correct. This amount is not taxable to the individual.

Expert:  Mark Taylor replied 4 months ago.

Please let me know if you have any other questions. I am happy to help.