could use some help. client invested 24,000 in a partnership in 2008. K-1 business loss for that year of 4,000 was dis-allowed due to passive activity limitation. Same scenario in 2009 for 12,000. in 2010, partnership was liquidated and final K-1 issued. business loss for 2010 was 12,000. a cash distribution for 1,500 was received and a section 1231 gain of 2,500 was also reported. i've checked passive activity, complete disposition of a passive activity, calculate at-risk limitation and calculate basis limitation in my tax program. i'm showing a gain of 2,500 on Form 4797 and a non-passive loss on page 2 of schedule E of 18,500. the 4797 amount makes sense but the schedule E loss does not. Can someone help?
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A simple-minded approach...
If there have been no other distributions or taxable gains, taxpayer's basis is 24,000 - 1500 + 2500 = 25,000. I would think that loss of this amount should show up somewhere. Perhaps someone else can weigh in on this.Evan Appelman, EA -
$25k should be the loss
I too think the loss is $25k.Comment
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