K1, Box 10, Net Section 1231 Gain - Where Do I Report This???

9 Replies

I'm going in circles trying to figure out where I report my K1, Box 10, Net Section 1231 Gain on my personal return. Partner instructions say I report it on form 4797, except that is where the number came from in the first place!!! Argh!!!!!

Burn it! Burn all of it! We need a new tax code! Figgin going in circles all day!!! I'm not stupid, and this stuff has me pulling my hair out.

@Merritt S.

Your accountant should be helping you out with this. 
In general it does end up going on form 4797.

I would have to assume the underlying partnership sold some asset and that is why you have an amount on line 10.

Originally posted by @Basit Siddiqi :

@Merritt S.

Your accountant should be helping you out with this. 
In general it does end up going on form 4797.

I would have to assume the underlying partnership sold some asset and that is why you have an amount on line 10.

 I have a K1 from a partnership. It has amounts reported in boxes 9c and 10 respectively. 9c is the Unrecaptured section 1250 gain, and 10 is the Net Section 1231 gain. Now, in general, a partner that receives a K1 is not going to know where those numbers came from, because all they should need to file their personal taxes would be the K1. However, I happen to do the business taxes too, so I know it came from the 4797. Box ten is my share of the total gain (from line 24 of the 4797), while box 9c is my share of the depreciation (from line 22 of the 4797). But again, that should not matter, as I am doing my personal taxes using my K1 I got from the partnership. My partner will have the same issue, except he won't have any idea where the numbers came from.

I'm missing something somewhere, I just know it. Been going in circles through the directions. Argh.

@Merritt S.

1231 gain flows to Form 4797 first. One must check whether prior year 1231 losses need to be recaptured. From there the long term capital gain portion flows to Schedule D. The ordinary gain recapture if any flows to Schedule 1 of Fork 1040.

Time to get a cpa.

Originally posted by @Lance Lvovsky :

@Merritt S.

1231 gain flows to Form 4797 first. One must check whether prior year 1231 losses need to be recaptured. From there the long term capital gain portion flows to Schedule D. The ordinary gain recapture if any flows to Schedule 1 of Fork 1040.

Time to get a cpa.

Thank you so much for your response! You confirmed what I was seeing and explained why it does that too!

Yes, I could have asked a computer, but I prefer to interact with people!!! (I did do numerous searches)

I'm glad you are a person - thanks again. Hit me up for appraisal advice if you ever need any.

Thanks for all the replies. Well, I finally threw in the towel and went with Turbo Tax. I have used Tax Act the last couple of years because my state requires partnerships to file electronically but, I do not like Tax Act. That program is not user friendly and if I had not already had some familiarity with doing taxes, I would have been seriously lost. I found Turbo Tax to be quite good and user friendly.

Sigh. I guess the old-school peeps like me will just have to assimilate - lol.

Thanks again to all that chimed in!

I have K1 question too. I have 1231 net section gain on K1 box 10 this year which from sell portion of the properties. And I have passive active loss carry over from previous year. All the gains become "allowed loss" this year. But I do not have much income or capital gain to offset those "allowed loss". If I take this loss, my income become negative. Can I defer part of this "allowed loss" to future year? If yes, which form I should override?

No, you cannot. Your negative income creates "net operating loss" which will carry into the next year by your software.