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Posted this on a Stonemor board somewhere but am not getting any confirmation or information. Hoping that the tax experts on here might be able to confirm or deny my attempts to report my K-1 income.

"so for those of us foolish enough to attempt our taxes by hand without the wondrous turbo tax, how exactly do we report the rental income? I'm looking at the page 1 of Schedule E which the accountant reported had no complications and I am not sure how to proceed at all since it looks super complicated to me. sigh. I thought I figured this all out the other day when I balanced the passive loss of $5 with the real estate income of $6 on page 2 but I see I have not.....
I guess I'll try again tomorrow....."

" okay, I tried again this morning and here is what I got:

I put the income from the real estate portion on the first page (line 3b and carried down to line 26. I entered "stonemor partners, EIN #" as the physical address and the distribution as #8 and typed in "partner dist. Real Est. Income")

Total on line 26: $6.00

I put the ordinary business loss of $5.00 on line 28 column f and carried it down to line 32.
(I think the ordinary business loss can be reported because it offsets the gain from the real estate income since they're both from the same partnership.....?)


Then I combined the two on line 41 for a gain of $1.00 which I reported on my 1040 (whatever the line is for schedule E, not looking at it....)

Does this look acceptable or do I need to only report the passive business income loss against business income and not real estate income? I can't believe so much stress for one whooping dollar....."



And just to confirm: I had another distribution from El Paso Pipelines at a loss. This is my first year with a K-1/partnership. Is my understanding correct that I do not report the El Paso Pipelines at all (because it is a loss) and I remember it for next year and then report my $12 loss when I either dispose of the property or have business income of more than $12 from El Paso?
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Intuit's Proseries answers questions for free and you do not have to purchase their software. You might want to ask there also.

http://community.intuit.com/category/tax-proseries-community...

Dusty
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Life with partnership investments is never simple. Most partnerships provide a nice investor packet with graphic instructions showing where each item from the K-1 goes.

I don't know anything about the specifics of the two partnerships you mentioned, but generally speaking, passive losses cannot be claimed as a reduction of income on a tax return until you have passive gains or you dispose of the activity that generated the passive losses. Nevertheless, you must report the losses in order to generate the carryforward which you will use in a future year. Look at Form 8582.

Ira
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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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Hmmm.
Well, I based my entries on careful reading of the IRS schedule E instructions and the accompanying instructions to the K-1 (especially p. 4) which said very clearly that Publicly Traded Partnerships are NOT reported like other partnerships and that the Form 8582 is NOT used (except for information for yourself). Only overall income gains are reported (losses are carried forward to offset gains from the same PTP in future years or until property is sold). Gains from the business offset losses.

I was just looking for some confirmation that I'm on the right track (which I think I got from the recommendation to check out the intuit question line where professionals were trying to do what I did--I think--while getting around the limitations of their tax software.)

As usual the tax code is too complex and no one understands it properly. I fill out my own taxes by hand because if I'm going to take the fall, I'd rather blame myself than a tax professional I blindly followed.

And I've never been more sure that we need to move this country towards the Fairtax. Scrap all this nonsense!
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Well, I based my entries on careful reading of the IRS schedule E instructions and the accompanying instructions to the K-1 (especially p. 4) which said very clearly that Publicly Traded Partnerships are NOT reported like other partnerships

It would have been nice to know this was a Publicly Traded Partnership. That indeed makes a difference.

Although how your careful reading led you to page 1 of schedule E, I'll never know.

I was just looking for some confirmation that I'm on the right track

I certainly can't give that you to. Frankly, I think you're on the wrong track, but there's no way to know from the bits and pieces you've posted.

As usual the tax code is too complex and no one understands it properly.

I have to disagree with you there. The tax code does have complexities. But there are lots of people out there who have a decent understanding of it. Several of them post here on a regular basis. In fact, you're trying to consult with them for free when most of us charge (and sometimes handsomely) for our hard-won knowledge.

For those who appreciate the assistance, I'm glad to post here and try to help. For those who denigrate the tax profession, well, they have a place, too.

--Peter
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Peter,
somehow every year I have a new question about my taxes. And the two times that I have posted on this board in actual genuine search of some guidance (because I have NO CLUE who to ask in real life!), I have been slammed for searching for free advice. I am sure tax professionals are great and I am sure there are smart ones out there who understand everything. I like to understand too. I like to know exactly what my financial decisions are doing and what the cause and effect of things are. I track my investments and small business transactions carefully and I have spent loads and loads of time reading all the IRS publications and trying to fill out the tax forms properly. I am not looking for free advice. I thought this board was a place where I could ask questions that I didn't understand and someone might be able to point me in the right direction.

I was led to page one of the schedule E because someone posted on the Pro board for STON that their accountant told them that was where the real estate income would be reported while the other business income would be reported on p. 2. (Before reading that, I had reported both on p. 2.) I'm obviously in over my head on this one, although if the IRS gets mad at me for a $5 mistake....well, at this point, oh well.

If you could recommend any good tax professionals near Lincoln, NE I surely would appreciate it. I have asked a few local accountants about things and they never seem to understand my questions so I get easily frustrated. (They just plug things into the computer and they can't tell me WHY things happen, which is what I like to understand so I can judge ramifications of various decisions.) And I don't have time to call everyone in the state to find the one who knows about what I need to know. So a lead from you would be great, if you have one.

organjess
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I was led to page one of the schedule E because someone posted on the Pro board for STON that their accountant told them that was where the real estate income would be reported while the other business income would be reported on p. 2. (Before reading that, I had reported both on p. 2.) I'm obviously in over my head on this one, although if the IRS gets mad at me for a $5 mistake....well, at this point, oh well.


Another case of free advice being worth what you paid for it. (Even the advice on this board can be wrong.) K-1 income doesn't get reported on page 1 of Schedule E regardless of the activity that generated it.

Ira
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And the two times that I have posted on this board in actual genuine search of some guidance (because I have NO CLUE who to ask in real life!), I have been slammed for searching for free advice.

That likely has to do with your posting style. Go back and read your posts in this thread and listen to them from the perspective of your reader. Listen to your tone and to the information you provided.

You might try taking a look at the partner's instructions for K-1, particularly the part about PTPs on page 4. Here's a link to the instructions on the IRS web site: http://www.irs.gov/pub/irs-pdf/i1065sk1.pdf

--Peter
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Thanks for the help. After reading the K-1 (esp. p. 4) and the instructions for Schedule E yet again and following Ira's suggestion, I've moved the real estate income back to the page 2 of Schedule E where I had it to begin with.

I'm sorry if my tone offends. Taxes begin to annoy me after years of trying to ask the IRS helpline questions and having them not be able to answer them.

organjess
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organjess, I'm the one that owes you an apology. In reading back over the thread, I can't see any good reason for my taking offense. You simply asked some questions and vented a little frustration. I'm sorry for taking potshots at you. It was uncalled for.

I must have talked to one too many demanding clients, or confused you with someone else.

I think you're back on the right track. For a PTP, you don't report anything if there's a loss. You just keep track of it for the following year and combine it with the next year activity.

On schedule E page 2, my software puts the partnership name, FEIN, and shows the amount as zero for a PTP with a loss. It also puts PTP next to the partnership name. I've never bothered to check the actual instructions as this reporting seems reasonable to me. (And I put a fair amount of trust in the software.) The ownership of the PTP is recognized, but there is no loss taken until the PTP is sold or the loss can be used to offset income from that PTP.

--Peter
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Thank you, Peter!
This was exactly the kind of confirmation that I was looking for since it sounds exactly like what I did! Okay, I now feel ready to print out my taxes and send them in....and move on to my state taxes.....

Jessica
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