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Taxtom
Taxtom, Accountant
Category: Capital Gains and Losses
Satisfied Customers: 2364
Experience:  25 years experience in Tax preparation
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I have a partnership interest in a limited partnership. My

Customer Question

I have a partnership interest in a limited partnership. My interest in the partnership is being bought out by another firm. I received a partial amount in 2014 and the remainder will be in 2015. For the 2014 tax year I received a K-1 and a worksheet provided
by an accounting firm. The K-1 says I have a Beginning Capital Account Balance of 50k, received a 20K distribution, and the ending balance is 30K. The accounting firm is saying that of the 20K, 7K is dividend and the rest is a capital gain. I do not understand
this. Can you take a look at the attached forms and advise if this is correct?
Submitted: 2 years ago.
Category: Capital Gains and Losses
Expert:  Taxtom replied 2 years ago.
Hello,The K-1 does not make sense. The qualified dividend should be shown on the K-1on line 6b. You do not receive a separate 1099 on a partnership. The partnership would have received the 1099. I would contact the partnership manager or General Partner.Thanks Tom
Customer: replied 2 years ago.
I received a 2014 1099-DIV for tax year 2014. Are you saying partners of a partnership shouldn't be receiving Dividend income? All this was prepared by a large accounting firm but none of this makes sense and no one knows what to do or how to treat this.If all I received was the 1099-DIV and the K-1. The IRS isn't expecting to see a capital gain on my tax return correct?
Expert:  Taxtom replied 2 years ago.
All of your income including the dividend income should be shown to you on your k-1 partnership. If you treat the difference between total received and dividends as a return of capital you would not have a capital gain for 2014. In 2015 you would treat the balance received less any remaining invested capital as capital gain.
Customer: replied 2 years ago.
So you are saying I should not have a gain unless the cash I received exceeds my capital account balance?
Customer: replied 2 years ago.
I saw your email what other information do you need?
Expert:  Taxtom replied 2 years ago.
Your original basis of the investment you show as 17400, if there have been no other capital distributions then your basis would be the 17400 less $13273 for a new basis of $4,127. When you receive your final distribution this year your gain would be distribution minus basis (4,127) to get your long term capital gain
Customer: replied 2 years ago.
I am confused. I know my original basis is 17400 but why does the k-1 show 52K?
Expert:  Taxtom replied 2 years ago.
Hello, That indicates that the partnership had profits but they did not distribute them.
Tom