Message Font: Serif | Sans-Serif
No. of Recommendations: 1
I'm doing the 1065 and schedule K for the investment club, and have a question. We had cash distributions in 2011 that were return of capital, and so there is no tax due on that. It looks like I just put that on Line 19A of the Schedule K, and that will translate to a code A on Line 19 of the partner's K-1. Is that all I do here? How does the IRS know that this is a return of capital and not a gain?

I have the capital gains reported separately already, but I'm feeling like I am missing something in terms of reporting.

I suspect you're doing things entirely wrong, but need more information. Were these "returns of capital" funds the club received from one (or more) of its investments, or were they withdrawals by a member?

If the former, there is no reporting of the amount on the 1065 or associated K-1s.

I hope you are using investment club accounting software to maintain your records, because if you aren't, there is a very high likelihood that you haven't generated correctly all of the numbers you need to prepare an accurate return. If you are using one of the ICLUB products, you should be referring to the Allocation of Income and Expense report or purchasing their additional tax module. If you are using bivio, you can generate the 1065 directly within the program.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.