Capital gains on K-1 treated as passive ? - Spidell

Capital gains on K-1 treated as passive ?

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Message Board Capital gains on K-1 treated as passive ?

  • This topic has 1 reply, 2 voices, and was last updated 6 days, 3 hours ago by Randal Thornally.
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    • #275412
      William Dewberry
      Participant

      My tax software, CCH prosystem, has a box on the K-1 input form, ” capital gains are passive”

      Ive researched this and cannot come up with an instance in which this might be true, and I need passive income so it would be good. Possible ?

    • #275789
      Randal Thornally
      Participant

      As an example, I have seen real estate partnerships acting as the “parent”, and investing in other “subsidiary” partnerships. The income and losses reported by the limited partners of the “parent” would generally be treated as passive.(I am of course ignoring any portfolio income.)

      A sale or disposition of a subsidiary partnership would be a capital transaction, and I believe properly treated as a passive capital gain. Information as to the proper tax reporting should be determined by the sponsor and provided to the limited partners. If unknown, contact investor relations to make sure you have the proper information.

      Suspended passive losses should net against the passive capital gain. Additionally, a capital loss forward should also net against the passive capital gain.

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