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Discussion:Basis in K-1

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Discussion Forum Index --> Advanced Tax Questions --> Basis in K-1


Discussion Forum Index --> Tax Questions --> Basis in K-1

Bell (talk|edits) said:

18 March 2014
TP paid $11,000 for an interest in an Oil & Gas Partnership. We have been accumulating losses for years and this year the Passive loss carryover will be over that amount. The F8582 will show $12,500 this year unless I stop it. I know that you should keep up with the accumulated losses, but do I limit what goes on the F8582? If I don't limit it, when he disposes of the partnership........all those losses will be allowed. Am I right to limit them to his basis by not adding more to the F8582? Not really sure as I have not had one where the losses exceeded the basis. Thanks, in advance.

Terry Oraha (talk|edits) said:

18 March 2014
I always recall basis, at risk, PAL - in that order. Hurdle 1, 2, 3. Sometimes I see things in the PAL bucket when really it's basis, sometimes I see people only limiting at-risk basis because it will always be equal to or less than basis.

You sure that you're including any loans allocated? If he has loans that give him basis and at-risk basis it may be appropriate to go to form 8582.

Kevinh5 (talk|edits) said:

18 March 2014
Also, there are a lot of things going on inside a K-1 that increase basis (as well as decrease it, every year). If you haven't been keeping up with this, you will want to go back to the beginning and look at each K-1 to get it correct now.

Bell (talk|edits) said:

18 March 2014
I have all the K-1's. I can see his initial purchase of $11,000 and can track the capital account. There are loans allocated to him. How do I compute the basis? Is it what the capital account is showing?

When I key in the K-1 losses, they go straight to the F8582. How do I keep them from flowing?

Kevinh5 (talk|edits) said:

18 March 2014
Look at all of the boxes of the K-1. Items of income increase basis. Debt increase increases basis. Items of losses and distributions and non-deductible expenses decrease basis. Debt decrease decreases basis.

NATP has a worksheet if you are a member.

Your software probably has a worksheet also.

Bell (talk|edits) said:

18 March 2014
When the losses equal basis......then just stopping entering K-1 losses? And keep a written document of these suspended losses? Otherwise, they just flow onto the F8582. Seems simple, but want to be sure I am doing this right. Thanks, Kevin.

DavidG (talk|edits) said:

18 March 2014
You don't want to stop entering the losses. Instead of manually keeping written documentation on the suspended losses, let the tax program do the work. There must be input areas to indicate basis and the tax program should be smart enough to not deduct losses if there is no basis.

Bell (talk|edits) said:

18 March 2014
I am using Proseries Basic and I am sure there is a place to enter basis, but I don't know where........

Kevinh5 (talk|edits) said:

18 March 2014
Look for something called Partner Basis Worksheet. In Drake there is a link from the K-1 page.

Bell (talk|edits) said:

18 March 2014
I think I found it, but must use regular Proseries.

Taxmonkey (talk|edits) said:

19 March 2014
The software that I use will not track a partners basis, and when I encounter a situation where the partner has suspended losses - losses in excess of basis - I must make a manual adjustment to items entered in the K-1 entry screen to disallow the losses. This will of course prevent them from flowing to the 8582. Copious note follow from such an adjustment.

Ckenefick (talk|edits) said:

19 March 2014
I know what you're saying. I have this one client/partner who has a MASSIVE suspended charitable contribution (cash contribution) because of the basis rules.

Ckenefick (talk|edits) said:

19 March 2014
TaxMonkey are you using Abacus Pro?

Lalva (talk|edits) said:

19 March 2014
I use ProSeries Professional and I cannot find that basis worksheet. Please, if you know if it's there, somewhere, let me know because I cannot find it.

A couple of years ago I almost made the change to Drake, and maybe I'll consider it again in the near future...

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