Discussion:Partnership experts please help!!
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WIaccountant (talk|edits) said: | 16 April 2007 |
| My client sold his partnership interest and his k1 shows gain of $70K. $50 was a distribution and then they restored negative basis of around $20K. So his gain was $70K. This info was according to partnership k-1 and his capital account shows cap contribution of $20K to restore basis and zero out the account at the end of the year.
I was reading some previous posts on Taxalmanac and I found that the capital account shouldn't be relied on for basis. Is this correct? 1. In order for me to calculate basis, Is my only option to get all the k-1 from the start date and recacl the basis? 2. Also one other question was, Do the distributions shown on the k-1 have to always equal the actual cash/ other property paid out to the partner? In one case distributions show $10K on the k-1 and the partner is saying he only received $6K for tax distributions and these were all the distributions during the year. So does this affect his basis. Should we go by the k-1? Please help. Hope everyone is done and ready to relax. I will be done as soon as I figure out this one and I have one other person. Thanks Sarah | |
| 16 April 2007 | |
| ...unless you are comfortable that any info provided by the p'ship ios correct, I believe you have to recreate the basis from the k-1s...I would use the distributions reported on the k-1, not the client's recollection. If the client is adamant that he only rec'd $6K, then he/she should contact the p'ship to get the issue resolved. It is worth much more than just the tax effect.
Good luck. | |
