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K1 question

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  • K1 question

    I have a normal w2 as a doc but get a k1 each year also for property pool etc. Does line 1 on the K1 "Ordinary Business Income" count as just regular income on my tax return? This number is negative as we took a loss, does this mean I get some more money back from the IRS. What about line 5 "interest income"? Line 19 "Distributions" (again this is a negative number).
    Thank you

  • #2

    Passive losses offset passive income.

    Interest is also taxed at ordinary income tax rates.

    Distributions may or may not be taxed.
    Helping those who wear the white coat get a fair shake on Wall Street since 2011


    • #3
      Do you materially participate in the property pool business? That determines if the losses is considered ordinary loss instead of passive loss.
      Box 5 is regular interest income.
      Is distribution in excess of basis?


      • #4
        I received a K1 that shows $19,974 in taxable income on line 2. This amount was lower because of bonus depreciation. In this particular partnership, all of the bonus depreciation is preferentially allocated to us due to the fact that we have preferred shares in the partnership. This K1 relates to the second year of this particular RE partnership.

        In box L related to "Partner's Capital Account Analysis", there was a distribution of $2,002,500 and that brought our capital account deeply into negative territory. But the distribution was not taxable income despite our capital account going negative.

        What determines if a distribution is taxable? And how does this relate to a positive or negative capital account? We are general partners in this partnership and we materially participate in the partnership.