2005 1065 K-1 Line 2
From TaxAlmanac
Generally, the income (loss) reported in box 2 is a passive activity amount for all partners. However, the income (loss) in box 2 is not from a passive activity if you were a real estate professional (defined on page 3) and you materially participated in the activity. If the partnership had more than one real estate rental activity, it will attach a statement that will identify the amount of income or loss from each activity.
If you are filing a 2005 Form 1040, use the following instructions to determine where to enter a box 2 amount:
1. If you have a loss from a passive activity in box 2 and you meet all of the following conditions, enter the loss on Schedule E (Form 1040), line 28, column (f). a. You actively participated in the partnership rental real estate activities. See Special allowance for a rental real estate activity on page 4.
b. Rental real estate activities with active participation were your only passive activities. c. You have no prior year unallowed losses from these activities. d. Your total loss from the rental real estate activities was not more than $25,000 (not more than $12,500 if married filing separately and you lived apart from your spouse all year).
e. If you are a married person filing separately, you lived apart from your spouse all year. f. You have no current or prior year unallowed credits from a passive activity. g. Your modified adjusted gross income was not more than $100,000 (not more than $50,000 if married filing separately and you lived apart from your spouse all year). h. Your interest in the rental real estate activity was not held as a limited partner. 2. If you have a loss from a passive activity in box 2 and you do not meet all the conditions in 1 above, report the loss following the Instructions for Form 8582 to figure how much of the loss you can report on Schedule E (Form 1040), line 28, column (f). However, if the box in item D is checked, report the loss following the rules for Publicly traded partnerships on page 4. 3. If you were a real estate professional and you materially participated in the activity, report box 2 income (loss) on Schedule E (Form 1040), line 28, column (h) or (j). 4. If you have income from a passive activity in box 2, enter the income on Schedule E, line 28, column (g). However, if the box in item D is checked, report the income following the rules for Publicly traded partnerships on page 4.
