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I have a partnership with a loss that exceeds my capital…

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I have a partnership...

I have a partnership with a loss that exceeds my capital contribution? How do I treat this on my tax return? I'm using HR Block?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Thats all i got

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I'd like to know how to make the adjustment or override the information...

Submitted: 25 days ago.Category: Tax
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Customer reply replied 25 days ago
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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 25 days ago
PDtax
PDtax, Certified Public Accountant (CPA)
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Customer reply replied 25 days ago
I do not want premium phone call. Please addreess question on line...
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 25 days ago

If your losses exceed your original capital contribution, those losses are generally suspended until you have basis (capital invested).

You can increase the amount of deductible losses if you have money at risk in the partnership. At risk money is loan guarantees or other financial guarantees you have made, like for a mortgage or business debt you are personally liable for. That excess commitment creates at risk limitation, which would allow you to deduct additional losses up to the extent of your basis, then at risk.

So, check your commitments, often found on K-1 of the partnership, to see if you have any share of recourse (liability extends to you) liabilities. if you do, then you can deduct additional losses.

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Customer reply replied 25 days ago
I have no other liabilities so I'd like to adjust the information to take the exact loss as my capital contribution. How do I make this adjustment?
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 25 days ago

I don't understand. The partnership had a loss in excess of your basis.

The partnership reports the loss in total, generally on line 1 of 1065.

Basis information is presented on Part II of the form. You can't fix the loss amount on the K-1. It is a 1040 adjustment.

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Customer reply replied 25 days ago
In part ll I need to adjust the amount of the .nonpassive loss to my capital contribution amount? Right
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 24 days ago
No. Report the full loss there. The partner applies the limitation once they get the amount.
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Customer reply replied 24 days ago
Sorry I don't understand "once they get that amount"....where would I make the adjustment? Specifically...
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 24 days ago
You don't make any adjustment at the 1065 level. You simply report the loss. Basis reporting, and at risk (recourse and nonrecourse lending) amounts are provided for the partner to do their math.You do not adjust the reported loss on the k-1 for what you believe to be basis or at risk limitations. Let me give an example of why.Partner A sells his interest to new partner A2. A2 paid less than A's inside basis. A2 can not rely on the partnership records of inside basis, since it is not changed for this sale.
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