FINAL PTP K-1 GAIN RECAPTURE

[Latka_123]

IS THERE A PARTICULAR PLACE OR BOX WHERE THIS HAPPENS?     

OR DO YOU JUST DECREASE THE LT CAPITAL GAIN BY THE AMOUNT OF THE DEPRECIATION RECAPTURE, AND MANUALLY ENTER THE RECAPTURE ON THE FORM 4797, PART II, LINE 10.  

SORRY, FIRST TIME I HAVE HAD TO DO THIS ON THE MAX PROGRAM.  AND I CAN'T SEEM TO FIND ANYTHING ON THIS WITH THE PROPER SEARCH TERMS.   THANK YOU.

[DANRVAN]

It is not clear what your are asking.  Are you talking about final sale of partnership assets?

[Abby Normal]

This is how we handle those:

1. Report sale on 8949 as shown by broker, verifying that the broker shows the original amount invested.
2. Enter codes BO in column f and combine the basis adjustment and the ordinary income portion that goes to the 4797. Be careful not to do backwards. The basis adjustment is a positive adjustment for the gain and the ordinary portion is negative.
3. On 4797, enter the ordinary portion as proceeds and force to section II. Choose the K1 that was sold (or partially sold) from the drop down list.

 

[Latka_123]

On 9/16/2019 at 1:14 PM, DANRVAN said:

It is not clear what your are asking.  Are you talking about final sale of partnership assets?

Thanks Abby!      

For the cost basis, I use the capital account withdrawal as the ending basis.     Not the original amount paid.    Then the gain subject to recapture as ordinary income listed in the K-1, is reported on the 4797 as ordinary income, this amount is subtracted from the capital gain amount.        Say the Sales Price is 10,000, and the basis is 6,000, and the gain subject to recapture is $3,000, you would have a $1,000 capital gain and a $3,000 ordinary income gain.       

For a loss transaction, say the sales price is $10,000 and the basis is $15,000, and the amount subject to recapture is $3,000, you would have a $8,000 capital loss, and a $3,000 ordinary gain on the Form 4797.

I am hoping I am seeing this correctly.    Thanks for your help.