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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121313  
Subject: Re: Partnerships and Schedule E ? Date: 3/30/2012 5:33 PM
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Get turbo tax or hire a pro. Trying to do a passive investment K-1 by hand is insanity.

I could do it - and I suppose most professionals could as well. But it's kind of like asking a doctor to perform surgery in your back yard with a table knife and a spoon.

But if you're bound and determined to do this, you'll at least need to start in the right place. Start by getting the "code book" for a partnership K-1. The partnership should have given you one, but if not, here you go. It's page two of this PDF: http://www.irs.gov/pub/irs-pdf/f1065sk1.pdf . For the most part, it tells you what each code means and where to report it on your tax return.

From your description, I think you're starting in the wrong place. The first entry from a K-1 goes on Form 8582 - for both gains and losses. Start with the worksheets on pages 2 and 3 of the 8582, and use those to complete page 1 of the 8582.

If you have some allowable passive losses or any passive gains, those amount will then make their way to Schedule E, page 2, and then on to your 1040.

--Peter
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