2005 1065 K-1 Line 19 code A
From TaxAlmanac
Code A shows the distributions the partnership made to you of cash and certain marketable securities. The marketable securities are included at their fair market value (FMV) on the date of distribution (minus your share of the partnership’s gain on the securities distributed to you). If the amount shown as code A exceeds the adjusted basis of your partnership interest immediately before the distribution, the excess is treated as gain from the sale or exchange of your partnership interest. Generally, this gain is treated as gain from the sale of a capital asset and should be reported on the Schedule D for your return. However, if you receive cash or property in exchange for any part of a partnership interest, the amount of the distribution attributable to your share of the partnership’s unrealized receivable or inventory items result in ordinary income (see Regulations section 1.751-1(a) and Sale or Exchange of Partnership Interest on page 1). For details, see Pub. 541.
The partnership will separately identify both of the following.
• The FMV of the marketable securities when distributed (minus your share of the gain on the securities distributed to you). • The partnership’s adjusted basis of those securities immediately before the distribution. Decrease the adjusted basis of your interest in the partnership (but not below zero) by the amount of cash distributed to you and the partnership’s adjusted basis of the distributed securities. Advances or drawings of money or property against your distributive share are treated as current
distributions made on the last day of the partnership’s tax year.
Your basis in the distributed marketable securities (other than in liquidation of your interest) is the smaller of:
• The partnership’s adjusted basis in the securities immediately before the distribution increased by any gain recognized on the distribution of the securities or • The adjusted basis of your partnership interest reduced by any cash distributed in the same transaction and increased by any gain recognized on the distribution of the securities. If you received the securities in liquidation of your partnership interest, your basis in the marketable securities is equal to the adjusted basis of your partnership interest reduced by any cash distributed in the same transaction and increased by any gain recognized on the distribution of the securities.
If, within 5 years of a distribution to you of marketable securities, you contributed appreciated property (other than those securities) to the partnership and the FMV of those securities exceeded the adjusted basis of your partnership interest immediately before the distribution (reduced by any cash received in the distribution), you may have to recognize gain on the appreciated property. For property contributed after June 8, 1997, the 5-year period is generally extended to 7 years. See section 737 for details.
