Department of the Treasury

Internal Revenue Service

Partner’s Instructions for

Schedule K-1 (Form 1065)
Partner’s Share of Income, Credits, Deductions, Etc.
(For Partner’s Use Only)
(Section references are to the Internal Revenue Code unless otherwise noted.)

General Instructions partnership was required to but has not

filed a return, you must file Form 8082,
appreciated inventory items (as defined
in section 751(d)).
Notice of Inconsistent Treatment or The written notice to the partnership
Purpose of Schedule K-1 Amended Return (Administrative must include the names and addresses
The partnership uses Schedule K-1 to Adjustment Request (AAR)), with your of both parties to the exchange, the
report your share of the partnership’s original or amended return to identify identifying numbers of the transferor and
income, credits, deductions, etc. Please and explain any inconsistency (or to (if known) of the transferee, and the date
keep it for your records. Do not file it note that a partnership return has not of the exchange.
with your tax return (unless you are been filed). An exception to this rule is made in
required to file it with Form 8271, If you are required to file Form 8082 the case of sales or exchanges of
Investor Reporting of Tax Shelter but fail to do so, you may be subject to publicly traded partnership interests for
Registration Number). A copy has been the accuracy-related penalty. This which a broker is required to file Form
filed with the IRS. penalty is in addition to any tax that 1099-B, Proceeds From Broker and
Although the partnership is not subject results from making your amount or Barter Exchange Transactions.
to income tax, you are liable for tax on treatment of the item consistent with If a partner is required to notify the
your share of the partnership income, that shown on the partnership’s return. partnership of a section 751(a) exchange
whether or not distributed, and you must Any deficiency that results from making but fails to do so, a penalty of $50 may
include your share on your tax return if a the amounts consistent may be be imposed for each such failure, unless
return is required. You should use these assessed immediately. the partner can show that the failure
instructions to help you report the items was due to reasonable cause and not
shown on Schedule K-1 on your tax Errors willful neglect.
return.
If you believe the partnership has made
The amount of loss and deduction an error on your Schedule K-1, notify the Nominee Reporting
that you may claim on your tax return partnership and ask for a corrected
may be less than the amount reported Generally, any person who holds,
Schedule K-1. Do not change any items
on Schedule K-1. It is the partner’s directly or indirectly, an interest in a
on your copy of Schedule K-1. Be sure
responsibility to consider and apply partnership as a nominee for another
that the partnership sends a copy of the
any applicable limitations. See person is required to furnish a written
corrected Schedule K-1 to the IRS. If
Limitations on Losses, Deductions, statement to the partnership by the last
you are a partner in a partnership that
and Credits, on page 2, for more day of the month following the end of
does not meet the small partnership
information. the partnership’s tax year. This
exception and you report any
Where “attach schedule” appears statement must include the name,
partnership item on your return in a
beside a line item on Schedule K-1, see address, and identifying number of the
manner that differs from the way the
either the schedule that the partnership nominee and such other person,
partnership reported it, you must file
has attached for that line or the space description of the partnership interest
Form 8082.
below line 23 of Schedule K-1. held as nominee for that person, and
other information required under
Sale or Exchange of Temporary Regulations section
Inconsistent Treatment of Partnership Interest 1.6031(c)-1T. Instead of this statement,
Items the nominee may furnish to the person
Generally, a partner who sells or on whose behalf the nominee holds the
Generally, you must report partnership exchanges a partnership interest in a
items shown on your Schedule K-1 (and partnership interest a copy of Schedule
section 751(a) exchange must notify the K-1 and related information within 30
any attached schedules) the same way partnership, in writing, within 30 days of
that the partnership treated the items on days of receiving it from the partnership.
the exchange (or, if earlier, by January
its return. This rule does not apply if 15 of the calendar year following the Note: A nominee who fails to furnish
your partnership is within the “small calendar year in which the exchange when due all of the required information,
partnership exception” and does not occurred). A “section 751(a) exchange” or who fur nishes incorrect information,
elect to have the tax treatment of is any sale or exchange of a partnership is subject to a penalty of $50 for each
partnership items determined at the interest in which any money or other statement for which a failure occurs. The
partnership level. property received by the partner in maximum penalty is $100,000 for all
If the treatment on your original or exchange for that partner’s interest is such failures dur ing a calendar year. If
amended return is inconsistent with the attributable to unrealized receivables (as the requirement to report correct
partnership’s treatment, or if the defined in section 751(c)) or substantially infor mation is intentionally disregarded,
each $50 penalty is increased to $100
Cat. No. 11396N
or, if greater, 10% of the aggregate ● Section 617 (deduction and recapture The above is not a complete list of
amount of items required to be reported of certain mining exploration items and factors that determine basis.
(and the $100,000 maximum does not expenditures); and See Pub. 541 for more information.
apply). ● Section 901 (foreign tax credit).
At-Risk Limitations
U.S. Persons With Interests Additional Information Generally, if you have (a) a loss or other
in Foreign Partnerships deduction from any activity carried on as
For more information on the treatment of a trade or business or for the production
If you are a U.S. person in a foreign partnership income, credits, deductions, of income by the partnership, and (b)
partnership that does not file a etc., get Pub. 541, Tax Information on amounts in the activity for which you are
partnership return, you may be required Partnerships; Pub. 535, Business not at risk, you will have to complete
to furnish information necessary to Expenses; and Pub. 556, Examination of Form 6198, At-Risk Limitations, to figure
determine your correct income (loss) Returns, Appeal Rights, and Claims for your allowable loss.
from the partnership. Refund.
The at-risk rules generally limit the
The above publications and other amount of loss (including loss on the
International Boycotts publications referenced throughout these disposition of assets) and other
instructions may be obtained at most deductions (such as the section 179
Every partnership that had operations in, IRS offices. To order publications and
or related to, a boycotting country, expense deduction) that you can claim
forms, call our toll-free number to the amount you could actually lose in
company, or a national of a country 1-800-TAX-FORM (1-800-829-3676).
must file Form 5713, International the activity. However, if you acquired
Boycott Report. your partnership interest before 1987,
If the partnership cooperated with an
Limitations on Losses, the at-risk rules do not apply to losses
Deductions, and Credits from an activity of holding real property
international boycott, it must give you a placed in service before 1987 by the
copy of its Form 5713. You must file There are three separate potential partnership. The activity of holding
your own Form 5713 to report the limitations on the amount of partnership mineral property does not qualify for this
activities of the partnership and any losses that you may deduct on your exception. The partnership should
other boycott operations that you may return. These limitations and the order in identify on an attachment to Schedule
have. You may lose certain tax benefits which they must be applied are as K-1 the amount of any losses that are
if the partnership participated in, or follows: the basis rules, the at-risk not subject to the at-risk limitations.
cooperated with, an international limitations, and the passive activity
boycott. See Form 5713 and the Generally, you are not at risk for
limitations. Each of these limitations is amounts such as the following:
instructions for more information. discussed separately below.
● Nonrecourse loans used to finance the
Note: Other limitations may apply to activity, to acquire property used in the
Definitions specific deductions (e.g., the section 179 activity, or to acquire your interest in
expense deduction). These limitations on the activity, that are not secured by your
General Partner specific deductions generally apply own property (other than the property
A general partner is a partner who is before the basis, at-r isk, and passive used in the activity). See Item B, on
personally liable for partnership debts. loss limitations. page 5, for the exception for qualified
Limited Partner Basis Rules nonrecourse financing secured by real
property.
A limited partner is a partner whose Generally, you may not claim your share
● Cash, property, or borrowed amounts
potential personal liability for partnership of a partnership loss (including a capital
used in the activity (or contributed to the
debts is limited to the amount of money loss) to the extent that it is greater than
activity, or used to acquire your interest
or other property that the partner the adjusted basis of your partnership
in the activity) that are protected against
contributed or is required to contribute interest at the end of the partnership’s
loss by a guarantee, stop-loss
to the partnership. tax year.
agreement, or other similar arrangement
You can compute the adjusted basis (excluding casualty insurance and
Nonrecourse Loans of your partnership interest by adding insurance against tort liability).
Nonrecourse loans are those liabilities of items that increase your basis and then
the partnership for which no partner ● Amounts borrowed for use in the
subtracting items that decrease your
bears the economic risk of loss. activity from a person who has an
basis.
interest in the activity, other than as a
Items that increase your basis are: creditor, or who is related, under section
Elections ● Money and your adjusted basis in 465(b)(3), to a person (other than you)
Generally, the partnership decides how property contributed to the partnership. having such an interest.
to figure taxable income from its ● Your share of the partnership’s To help you complete Form 6198, the
operations. However, certain elections income. partnership should specify on an
are made by you separately on your ● Your share of the increase in the attachment to Schedule K-1 your share
income tax return and not by the liabilities of the partnership (or your of the total pre-1976 losses from a
partnership. These elections are made individual liabilities caused by your section 465(c)(1) activity for which there
under the following code sections: assumption of partnership liabilities). existed a corresponding amount of
● Section 59(e) (deduction of certain Items that decrease your basis are: nonrecourse liability at the end of the
qualified expenditures ratably over the year in which the losses occurred. Also,
● Money and the adjusted basis of you should get a separate statement of
period of time specified in that section.
property distributed to you. income, expenses, etc., for each activity
For more information, see the
instructions for lines 18a and 18b of ● Your share of the partnership’s losses. from the partnership.
Schedule K-1); ● Your share of the decrease in the
liabilities of the partnership (or your Passive Activity Limitations
● Section 108(b)(5) (income from the
discharge of indebtedness); individual liabilities assumed by the Section 469 provides rules that limit the
partnership). deduction of certain losses and credits.
These rules apply to partners who:

Page 2
● Are individuals, estates, trusts, closely 1. You participated in the activity for 2. You do the work in your capacity as
held corporations, or personal service more than 500 hours during the tax year; an investor and you are not directly
corporations, and or involved in the day-to-day operations of
● Have a passive activity loss or credit 2. Your participation in the activity for the activity. Examples of work done as
for the tax year. the tax year constituted substantially all an investor that would not count toward
of the participation in the activity of all material participation include
Passive activities include:
individuals (including individuals who are (a) studying and reviewing financial
1. Trade or business activities in which statements or reports on operations of
not owners of interests in the activity); or
you do not materially participate, and the activity; (b) preparing or compiling
3. You participated in the activity for
2. Activities that meet the definition of summaries or analyses of the finances
more than 100 hours during the tax year,
rental activities under Temporary or operations of the activity for your own
and your participation in the activity for
Regulations section 1.469-1T(e)(3) and use; and (c) monitoring the finances or
the tax year was not less than the
Regulations section 1.469-1(e)(3). operations of the activity in a
participation in the activity of any other
Passive activities do not include: nonmanagerial capacity.
individual (including individuals who were
1. Trade or business activities in which not owners of interests in the activity) for Effect of determination.—If you
you materially participate; the tax year; or determine that you materially
2. Working interests in oil or gas wells; participated in a trade or business
4. The activity was a significant
activity of the partnership, report the
3. Qualifying low-income housing participation activity for the tax year, and
income (loss), deductions, and credits
activities; and you participated in all significant
from that activity as indicated in either
4. An activity of trading personal participation activities (including
column (c) of Schedule K-1 or the
property for the account of owners of activities outside the partnership) during
instructions for each line.
interests in the activity. the year for more than 500 hours. A
“significant participation activity” is any If you determine that you did not
If you are an individual, an estate, or a trade or business activity in which you materially participate in a trade or
trust, and you have a passive activity participated for more than 100 hours business activity of the partnership or if
loss or credit, get Form 8582, Passive during the year and in which you did not you have income (loss), deductions, or
Activity Loss Limitations, to figure your materially participate under any of the credits from a rental activity of the
allowable passive losses and Form material participation tests (other than partnership, the amounts from that
8582-CR, Passive Activity Credit this test 4); or activity are passive. Report passive
Limitations, to figure your allowable income (losses), deductions, and credits
passive credits. For a corporation, get 5. You materially participated in the
as follows:
Form 8810, Corporate Passive Activity activity for any 5 tax years (whether or
not consecutive) during the 10 tax years 1. If you have an overall gain (the
Loss and Credit Limitations. See the excess of income over deductions and
instructions for these forms for more that immediately precede the tax year;
or losses, including any prior year
information. unallowed loss) from a passive activity,
If the partnership is conducting more 6. The activity was a personal service
report the income, deductions, and
than one activity, it will give you a activity and you materially participated in
losses from the activity as indicated on
statement attached to your Schedule the activity for any 3 tax years (whether
Schedule K-1 or in these instructions.
K-1 that identifies each activity (trade or or not consecutive) preceding the tax
year. A “personal service activity” is an 2. If you have an overall loss (the
business activity, rental real estate excess of deductions and losses,
activity, rental activity other than rental activity involving the performance of
personal services in the fields of health, including any prior year unallowed loss,
real estate, etc.) and specifies the over income) or credits from a passive
income (loss), deductions, and credits law, engineering, architecture,
accounting, actuarial science, activity, you must report the income,
from each activity. deductions, losses, and credits from all
performing arts, consulting, or any other
Material participation in trade or trade or business in which capital is not passive activities following the
business activities.—You must a material income-producing factor; or Instructions for Form 8582 or Form
determine whether you materially 8582-CR (or Form 8810), to see if your
participated in each trade or business 7. Based on all of the facts and
deductions, losses, and credits are
activity held through the partnership. All circumstances, you participated in the
limited under the passive activity rules.
determinations of material activity on a regular, continuous, and
substantial basis during the tax year. Publicly traded partnerships.—The
participation are made with respect to passive activity limitations are applied
your participation during the Limited partners.—If you are a limited
separately for items (other than the
partnership’s tax year. partner, you do not materially participate
low-income housing credit and the
Material participation standards for in an activity unless you meet one of the
rehabilitation credit) from each publicly
partners who are individuals are listed tests in paragraphs 1, 5, or 6 above.
traded partnership (PTP). Thus, a net
below. Special rules apply to certain Work counted toward material passive loss from a PTP may not be
retired or disabled farmers and to the participation.—Generally, any work that deducted from other passive income.
surviving spouses of farmers. See the you or your spouse does in connection Instead, a passive loss from a PTP is
Instructions for Form 8582 for details. with an activity held through a suspended and carried forward to be
Corporations should refer to the partnership (where you own your applied against passive income from the
Instructions for Form 8810 for the partnership interest at the time the work same PTP in later years. If the partner’s
material participation standards that is done) is counted toward material entire interest in the PTP is completely
apply to them. participation. However, work in disposed of, any unused losses are
connection with the activity is not allowed in full in the year of disposition.
Individuals (other than limited counted toward material participation if:
partners).—If you are an individual If you have an overall gain from a PTP,
(either a general partner or a limited 1. The work is not the sort of work the net gain is nonpassive income. In
partner who owned a general that owners of the activity would usually addition, the nonpassive income is
partnership interest at all times during do and one of the principal purposes of included in investment income for
the tax year), you materially participated the work that you or your spouse does purposes of figuring your investment
in an activity only if: is to avoid the passive loss or credit interest expense deduction.
limitations; or

Page 3
 Do not report passive income, gains, (g). Carry forward to 1993 the unallowed participate unless future regulations
or losses from a PTP on Form 8582. loss of $4,800 ($12,000–$7,200). provide an exception.
Instead, use the following rules to figure If you have unallowed losses from You are not considered to actively
and report on the proper form or more than one activity of the PTP or participate in a rental real estate activity
schedule your income, gains, and losses from the same activity of the PTP that if at any time during the tax year your
from passive activities you held through must be reported on different forms, you interest (including your spouse’s interest)
each PTP you owned during the tax must allocate the unallowed losses on a in the activity was less than 10% (by
year: pro rata basis to figure the amount value) of all interests in the activity.
1. Combine any current year income, allowed from each activity or on each Active participation is a less stringent
gains and losses, and any prior year form. requirement than material participation.
unallowed losses to see if you have an Tax tip: To allocate and keep a record You may be treated as actively
overall gain or loss from the PTP. Include of the unallowed losses, you can use participating if you participated, for
only the same types of income and Worksheets 4, 5, and 6 of Form 8582. example, in making management
losses you would include in figuring your List each activity of the PTP in decisions or arranging for others to
net income or loss from a non-PTP Worksheet 4. Enter the overall loss from provide services (such as repairs) in a
passive activity. Get Pub. 925, Passive each activity in column (a). Complete significant and bona fide sense.
Activity and At-Risk Rules, for more column (b) of Worksheet 4 according to Management decisions that can count
details. its instructions. Multiply the total as active participation include approving
2. If you have an overall gain, the net unallowed loss from the PTP by each new tenants, deciding on rental terms,
gain portion (total gain minus total ratio in column (b) and enter the result in approving capital or repair expenditures,
losses) is nonpassive income. On the column (c) of Worksheet 4. Then and other similar decisions.
form or schedule you normally use, complete Worksheet 5 if all of the loss An estate is treated as actively
report the net gain portion as from the same activity is to be reported participating for tax years ending less
nonpassive income and the remaining on one form or schedule. Use than 2 years after the date of the
income and the total losses as passive Worksheet 6 instead of Worksheet 5 if decedent’s death if the decedent would
income and loss. Write to the left of the you have more than one loss to be have satisfied the active participation
entry space, “From PTP.” It is important reported on different forms or schedules requirements for the activity for the tax
to identify the nonpassive income for the same activity. Enter the net loss year the decedent died. Such an estate
because the nonpassive portion is plus any prior year unallowed losses in is a “qualifying estate.”
included in modified adjusted gross column (a) of Worksheet 5 (or Worksheet The maximum special allowance that
income for purposes of figuring on Form 6 if applicable). The losses in column (c) single individuals and married individuals
8582 the “special allowance” for active of Worksheet 5 (column (e) of Worksheet filing a joint return for the tax year can
participation in a non-PTP rental real 6) are the allowed losses to report on qualify for is $25,000. The maximum is
estate activity. In addition, the the forms or schedules. Both these $12,500 in the case of married
nonpassive income is included in losses and any income from the PTP individuals who file separate returns for
investment income when figuring your should be reported on the forms and the tax year and who lived apart all
investment interest expense deduction schedules you normally use. times during the year. The maximum
on Form 4952. 4. If you have an overall loss and you special allowance for which an estate
Example: If you have Schedule E disposed of your entire interest in the can qualify is $25,000 reduced by the
income of $8,000, and a Form 4797 PTP to an unrelated person in a fully special allowance for which the surviving
prior year unallowed loss of $3,500 from taxable transaction during the year, your spouse qualifies.
the passive activities of a particular PTP, losses (including prior year unallowed If your modified adjusted gross
you have a $4,500 overall gain ($8,000– losses) allocable to the activity for the income (defined below) is $100,000 or
$3,500). On Schedule E, Part II, report year are not limited by the passive loss less ($50,000 or less in the case of
the $4,500 net gain as nonpassive rules. A fully taxable transaction is one married persons filing separately), your
income in column (k). In column (h), in which you recognize all of your loss is deductible up to the amount of
report the remaining Schedule E gain of realized gain or loss. Report the income the maximum special allowance referred
$3,500 ($8,000–$4,500). On the and losses on the forms and schedules to in the preceding paragraph. If your
appropriate line of Form 4797, report the you normally use. modified adjusted gross income is more
prior year unallowed loss of $3,500. Be Note: For rules on the disposition of an than $100,000 (more than $50,000 in the
sure to write “From PTP” to the left of entire interest reported using the case of married persons filing
each entry space. installment method, see the Instructions separately), the special allowance is
3. If you have an overall loss (but did for Form 8582. limited to 50% of the difference between
not dispose of your entire interest in the Active participation in a rental real $150,000 ($75,000 in the case of
PTP to an unrelated person in a fully estate activity.—If you actively married persons filing separately) and
taxable transaction during the year), the participated in a rental real estate your modified adjusted gross income.
losses are allowed to the extent of the activity, you may be able to deduct up When modified adjusted gross income is
income, and the excess loss is carried to $25,000 of the loss from the activity $150,000 or more ($75,000 or more in
forward to use in a future year when you from nonpassive income. This “special the case of married persons filing
have income to offset it. Report as a allowance” is an exception to the separately), there is no special
passive loss on the schedule or form general rule disallowing losses in excess allowance.
you normally use the portion of the loss of income from passive activities. The Modified adjusted gross income is
equal to the income. Report the income special allowance is not available if you your adjusted gross income figured
as passive income on the form or were married, file a separate return for without taking into account any passive
schedule you normally use. the year, and did not live apart from your activity loss, any taxable social security
Example: You have a Schedule E loss spouse at all times during the year. or equivalent railroad retirement benefits,
of $12,000 (current year losses plus prior Only individuals and qualifying estates any deductible contributions to an IRA
year unallowed losses) and a Form 4797 can actively participate in a rental real or certain other qualified retirement
gain of $7,200. Report the $7,200 gain estate activity. Estates (other than plans under section 219, the deduction
on the appropriate line of Form 4797. qualifying estates), trusts, and allowed under section 164(f) for one-half
On Schedule E, Part II, report $7,200 of corporations cannot actively participate. of self-employment taxes, or the
the losses as a passive loss in column Limited partners cannot actively exclusion from income of interest from
Page 4
Series EE U.S. Savings Bonds used to Qualified nonrecourse financing credits, deductions, etc., from
pay higher education expenses. secured by real property used in an partnership business or rental activities
Special rules for certain other activity of holding real property that is without reference to limitations on losses
activities.—Special rules apply to subject to the at-risk rules is treated as or adjustments that may be required of
certain other activities. If you have net an amount at risk. Qualified nonrecourse you because of:
income (loss), deductions, or credits financing generally includes financing for 1. The adjusted basis of your
from any activity to which special rules which no one is personally liable for partnership interest,
apply, the partnership will identify the repayment that is borrowed for use in an
2. The amount for which you are at
activity and all amounts relating to it on activity of holding real property and that
risk, or
Schedule K-1 or on an attachment to is loaned or guaranteed by a Federal,
state, or local government or borrowed 3. The passive activity limitations. For
Schedule K-1. information on these provisions, see
from a “qualified” person. Qualified
If you have net income subject to Limitations on Losses, Deductions,
persons include any person actively and
recharacterization under Temporary and Credits, beginning on page 2.
regularly engaged in the business of
Regulations section 1.469-2T(f) and If you are an individual and the
lending money, such as a bank or
Regulations section 1.469-2(f), report passive activity rules do not apply to the
savings and loan association. Qualified
such amounts in accordance with the amounts shown on your Schedule K-1,
persons generally do not include related
Instructions for Form 8582 (or Form take the amounts shown in column (b)
parties (unless the nonrecourse financing
8810). and enter them on the lines on your tax
is commercially reasonable and on
If you have net income (loss), substantially the same terms as loans return as indicated in column (c). If the
deductions, or credits from any of the involving unrelated persons), the seller of passive activity rules do apply, report the
following activities, such amounts are the property, or a person who receives a amounts shown in column (b) as
treated as nonpassive and you should fee for the partnership’s investment in indicated in the line instructions below.
report them as instructed in column (c) the real property. See Pub. 925 for more If you are not an individual, report the
of Schedule K-1 or in these instructions: information on qualified nonrecourse amounts in column (b) as instructed on
1. Qualified low-income housing financing. your tax return.
projects; Both the partnership and you must The line numbers in column (c) are
2. Working interests in oil and gas meet the qualified nonrecourse rules on references to forms in use for calendar
wells; or this debt before you can include the year 1992. If you file your tax return on a
3. Trading personal property for the amount shown next to “Qualified calendar year basis, but your partnership
account of owners of interests in the nonrecourse financing” in your at-risk files a return for a fiscal year, enter the
activity. computation. amounts shown in column (b) on your
See Limitations on Losses, tax return for the year in which the
Deductions, and Credits on page 2 for partnership’s fiscal year ends. For
Specific Instructions more information on the at-risk example, if the partnership’s tax year
limitations. ends in February 1993, report the
General Information and amounts in column (b) on your 1993 tax
Questions Items G(1) and G(2) return.
If the partnership is a registration- If you have losses, deductions, or
Item B required tax shelter or has invested in a credits from a prior year that were not
Item B should show your share of the registration-required tax shelter, it should deductible or usable because of certain
partnership’s nonrecourse liabilities, have completed Items G(1) and G(2). If limitations, such as the at-risk rules, they
partnership-level qualified nonrecourse you claim or report any income, loss, may be taken into account in
financing, and other liabilities as of the deduction, or credit from a tax shelter, determining your net income, loss, or
end of the partnership’s tax year. If you you are required to attach Form 8271 to credits for this year. However, do not
terminated your interest in the your tax return. If the partnership has combine the prior-year amounts with any
partnership during the tax year, Item B invested in a tax shelter, it is required to amounts shown on this Schedule K-1 to
should show the share that existed give you a copy of its Form 8271 with get a net figure to report on any
immediately before the total disposition. your Schedule K-1. You should use the supporting schedules, statements, or
A partner’s “other liability” is any information on this Form 8271 to forms attached to your return. Instead,
partnership liability for which a partner is complete Part I of your Form 8271. report the amounts on the attached
personally liable. If the partnership itself is a schedule, statement, or form on a
Use the total of the three amounts for registration-required tax shelter, use the year-by-year basis.
computing the adjusted basis of your information on Schedule K-1 (name of If you have amounts other than those
partnership interest. the partnership, partnership identifying shown on Schedule K-1 to report on
Generally, you may use only the number, tax shelter registration number, Schedule E (Form 1040), enter each
amounts shown next to “Qualified type of tax shelter) to complete Part I of item on a separate line of Part II of
nonrecourse financing” and “Other” to Form 8271. The partnership will identify Schedule E.
compute your amount at risk. Do not the type of tax shelter in the space
include any amounts that are not at risk provided in Item G(2). Income
if such amounts are included in either of Item H
these categories. Line 1—Ordinary Income (Loss)
If your partnership is engaged in two If the box in Item H is checked, you are From Trade or Business Activities
or more different types of activities a partner in a publicly traded partnership The amount reported for line 1 is your
subject to the at-risk provisions, or a and must follow the rules discussed on share of the ordinary income (loss) from
combination of at-risk activities and any page 3 under Publicly traded the trade or business activities of the
other activity, the partnership should partnerships. partnership. Generally, where you report
give you a statement showing your this amount on Form 1040 depends on
share of nonrecourse liabilities, Lines 1 through 23 whether the amount is from an activity
partnership-level qualified nonrecourse The amounts shown on lines 1 through that is a passive activity to you. If you
financing, and other liabilities for each 23 reflect your share of income, loss, are an individual partner filing your 1992
activity. Form 1040, find your situation below
Page 5
and report your line 1 income (loss) as (not more than $50,000 if married filing statement your share of REMIC taxable
instructed, after applying the basis and separately and you lived apart from your income (net loss) that you report on
at-risk limitations on losses: spouse all year). Schedule E (Form 1040), Part IV, column
1. Report line 1 income (loss) from h. Your interest in the rental real estate (d). The statement will also report your
partnership trade or business activities activity is not held as a limited partner. share of any “excess inclusion” that you
in which you materially participated on 2. If you have a loss on line 2 (other report on Schedule E, Part IV, column
Schedule E (Form 1040), Part II, column than from a qualified low-income (c), and your share of section 212
(i) or (k). housing project), and you do not meet expenses that you report on Schedule E,
all of the conditions in 1 above, report Part IV, column (e). If you itemize your
2. Report line 1 income (loss) from
the loss following the Instructions for deductions on Schedule A (Form 1040),
partnership trade or business activities
Form 8582 to determine how much of you may also deduct these section 212
in which you did not materially
the loss can be reported on Schedule E expenses as a miscellaneous deduction
participate, as follows:
(Form 1040), Part II, column (g). subject to the 2% adjusted gross
a. If income is reported on line 1, income floor on Schedule A, line 20.
report the income on Schedule E, Part II, However, if the box in Item H is
column (h). However, if the box in Item H checked, report the loss following the Line 5—Guaranteed Payments to
is checked, report the income following rules for Publicly traded partnerships Partners
the rules for Publicly traded on page 3.
partnerships on page 3. 3. If you are a qualified investor Generally, amounts on this line are not
reporting a qualified low-income housing part of a passive activity and should be
b. If a loss is reported on line 1, report reported on Schedule E (Form 1040),
the loss following the Instructions for project loss, report the loss on Schedule
E, Part II, column (i). Part II, column (k). For example,
Form 8582, to determine how much of guaranteed payments for personal
the loss can be reported on Schedule E, 4. If you have income on line 2, enter services paid to any partner are not
Part II, column (g). However, if the box in the income on Schedule E, Part II, passive activity income.
Item H is checked, report the loss column (h). However, if the box in Item H
following the rules for Publicly traded is checked, report the income following Line 6—Net Gain (Loss) Under
partnerships on page 3. the rules for Publicly traded Section 1231 (Other Than Due to
partnerships on page 3. Casualty or Theft)
Line 2—Net Income (Loss) From
Rental Real Estate Activities Line 3—Net Income (Loss) From If the amount on line 6 is from a rental
Generally, the income (loss) reported on Other Rental Activities activity, the section 1231 gain (loss) is a
passive activity amount. Likewise, if the
line 2 is a passive activity amount to all The amount on line 3 is a passive
amount is from a trade or business
partners. There is an exception, activity amount for all partners. Report
activity and you did not materially
however, for losses from a qualified the income or loss as follows:
participate in the activity, the section
low-income housing project. The passive 1. If line 3 is a loss, report the loss 1231 gain (loss) is a passive activity
activity loss limitations do not apply to following the Instructions for Form 8582. amount.
losses incurred by qualified investors in However, if the box in Item H is
qualified low-income housing projects. ● If the amount is not a passive activity
checked, report the loss following the
The partnership will have attached a amount to you, report it on line 2,
rules for Publicly traded partnerships
schedule for line 2 to identify any such column (g) or (h), whichever is
on page 3.
amounts. applicable, of Form 4797, Sales of
2. If income is reported on line 3, Business Property. You do not have to
If you are filing a 1992 Form 1040, use report the income on Schedule E (Form complete the information called for in
the following instructions to determine 1040), Part II, column (h). However, if the columns (b) through (f). Write “From
where to enter a line 2 amount: box in Item H is checked, report the Schedule K-1 (Form 1065)” across these
1. If you have a loss (other than from income following the rules for Publicly columns.
a qualified low-income housing project) traded partnerships on page 3.
● If gain is reported on line 6 and it is a
on line 2 and you meet all of the
Line 4—Portfolio Income (Loss) passive activity amount to you, report
following conditions, enter the loss on
the gain on line 2, column (h), of Form
Schedule E (Form 1040), Part II, column Portfolio income or loss is not subject to 4797.
(g): the passive activity limitations. Portfolio
income includes income not derived in ● If a loss is reported on line 6 and it is
a. You actively participated in the
the ordinary course of a trade or a passive activity amount to you, see
partnership rental real estate activities.
business from interest, dividends, Passive Loss Limitations in the
(See Active participation in a rental
annuities, or royalties and gain or loss Instructions for Form 4797. You will
real estate activity, on page 4.)
on the sale of property that produces need to report the loss following the
b. Rental real estate activities with Instructions for Form 8582 to determine
active participation were your only these types of income or is held for
investment. Column (c) of Schedule K-1 how much of the loss is allowed on
passive activities. Form 4797. However, if the box in
tells individual partners where to report
c. You have no prior year unallowed Item H is checked, report the loss
this income on Form 1040.
losses from these activities. following the rules for Publicly traded
The partnership uses line 4f to report partnerships on page 3.
d. Your total loss from the rental real
portfolio income other than interest,
estate activities was not more than
dividend, royalty, and capital gain (loss) Line 7—Other Income (Loss)
$25,000 (not more than $12,500 if
income. It will attach a statement to tell
married filing separately and you lived Amounts on this line are other items of
you what kind of portfolio income is
apart from your spouse all year). income, gain, or loss not included on
reported on line 4f. An example of
e. If you are a married person filing lines 1 through 6. The partnership
portfolio income that could be reported
separately, you lived apart from your should give you a description and the
on line 4f is income from a real estate
spouse all year. amount of your share for each of these
mortgage investment conduit (REMIC) in
f. You have no current or prior year items.
which the partnership is a residual
unallowed credits from a passive activity. interest holder. Report loss items that are passive
g. Your modified adjusted gross activity amounts to you following the
If the partnership has a residual
income was not more than $100,000 Instructions for Form 8582. However, if
interest in a REMIC, it will report on the
Page 6
the box in Item H is checked, report the limitations. For further information, see Note: If there was a gain (loss) from a
loss following the rules for Publicly the Form 1040 instructions. casualty or theft to property not used in
traded partnerships on page 3. If property other than cash is a trade or business or for income-
Report income or gain items that are contributed and if the claimed deduction producing purposes, you will be notified
passive activity amounts to you as for one item or group of similar items of by the partnership. You will have to
instructed below. property exceeds $5,000, the complete your own For m 4684.
The instructions given below tell you partnership must give you a copy of ● Any penalty on early withdrawal of
where to report line 7 items if such items Form 8283, Noncash Charitable savings.
are not passive activity amounts. Contributions, to attach to your tax ● Soil and water conservation
return. Do not deduct the amount shown expenditures. See section 175 for
Line 7 items may include the
on this form. It is the partnership’s limitations on the amount you are
following:
contribution. Instead, deduct the amount allowed to deduct.
● Partnership gains from the disposition shown on line 8 of your Schedule K-1
of farm recapture property (see Form ● Expenditures for the removal of
(Form 1065). architectural and transportation barriers
4797) and other items to which section
If the partnership provides you with to the elderly and disabled that the
1252 applies.
information that the contribution was partnership elected to treat as a current
● Income from recoveries of tax benefit property other than cash and does not expense. The deductions are limited by
items. A tax benefit item is an amount give you a Form 8283, see the section 190(c) to $15,000 per year from
you deducted in a prior tax year that Instructions for Form 8283 for filing all sources.
reduced your income tax. Report this requirements. A Form 8283 does not
amount on the “Other income” line of ● Any amounts paid during the tax year
need to be filed unless the total claimed for insurance that constitutes medical
Form 1040 to the extent it reduced your deduction for all contributed items of
tax. care for you, your spouse, and your
property exceeds $500. dependents. The partnership should
● Gambling gains and losses. Charitable contribution deductions are separately state (a) amounts paid before
1. If the partnership was not engaged not taken into account in figuring your July 1, 1992, for coverage before that
in the trade or business of gambling: passive activity loss for the year. Do not date, and (b) amounts paid after June
(a) report gambling winnings on Form enter them on Form 8582. 30, 1992, or amounts paid for coverage
1040, line 22, and (b) deduct gambling after that date. On line 26 of Form 1040,
losses to the extent of winnings on Line 9—Section 179 Expense you may be allowed to deduct up to
Schedule A, line 25. Deduction 25% of amounts paid before July 1,
2. If the partnership was engaged in Use this amount, along with the total 1992, for coverage before that date,
the trade or business of gambling: cost of section 179 property placed in even if you do not itemize deductions. If
(a) report gambling winnings in Part II of service during the year from other you do itemize deductions, enter on line
Schedule E, and (b) deduct gambling sources, to complete Part I of Form 1 of Schedule A (Form 1040) any
losses to the extent of winnings in Part II 4562, Depreciation and Amortization. amounts not deducted on line 26 of
of Schedule E. Use Part I of Form 4562 to figure your Form 1040.
● Any income, gain, or loss to the allowable section 179 expense ● Payments on behalf of a partner to an
partnership under section 751(b). Report deduction from all sources. Report the IRA, Keogh, or a simplified employee
this amount on Form 4797, line 11. amount on line 12 of Form 4562 pension (SEP) plan. See Form 1040
● Specially allocated ordinary gain (loss). allocable to a passive activity from the instructions for lines 24a and 24b to
Report this amount on Form 4797, line partnership following the Instructions for figure your IRA deduction. Payments
11. Form 8582. However, if the box in Item made to a Keogh or SEP plan will be
H is checked, report this amount entered on Form 1040, line 27. If the
● Net gain (loss) from involuntary
following the rules for Publicly traded payments to a Keogh plan were to a
conversions due to casualty or theft. The
partnerships, on page 3. If the amount defined benefit plan, the partnership
partnership will give you a schedule that
is not a passive activity deduction, should give you a statement showing
shows the amounts to be entered on
report it on Schedule E (Form 1040), the amount of the benefit accrued for
Form 4684, Casualties and Thefts, line
Part II, column (j). the tax year.
34, columns (b)(i), (b)(ii), and (c).
● Net short-term capital gain or loss and Line 10—Deductions Related to ● Interest expense allocated to
net long-term capital gain or loss from debt-financed distributions. The manner
Portfolio Income in which you report such interest
Schedule D (Form 1065) that is not
portfolio income (e.g., gain or loss from Amounts entered on this line are expense depends on your use of the
the disposition of nondepreciable deductions that are clearly and directly distributed debt proceeds. See Notice
personal property used in a trade or allocable to portfolio income (other than 89-35, 1989-1 C.B. 675, for details.
business activity of the partnership). investment interest expense and section The partnership should give you a
Report a net short-term capital gain or 212 expenses from a REMIC). Generally, description and the amount of your
loss on Schedule D (Form 1040), line 5, you should enter line 10 amounts on share for each of these items.
column (f) or (g), and a net long-term Schedule A (Form 1040), line 20. See
the Instructions for Schedule A, lines 20
capital gain or loss on Schedule D (Form
and 25, for more information. These Investment Interest
1040), line 13, column (f) or (g).
deductions are not taken into account in If the partnership paid or accrued
● Any net gain or loss from section 1256 figuring your passive activity loss for the interest on debts properly allocable to
contracts. Report this amount on line 1 year. Do not enter them on Form 8582. investment property, the amount of
of Form 6781, Gains and Losses From interest you are allowed to deduct may
Section 1256 Contracts and Straddles. Line 11—Other Deductions be limited.
Amounts on this line are deductions not For more information and the special
Deductions included on lines 8, 9, 10, 17e, and 18a, provisions that apply to investment
such as: interest expense, get Form 4952,
Line 8—Charitable Contributions
● Itemized deductions (Form 1040 filers Investment Interest Expense Deduction,
The partnership will give you a schedule enter on Schedule A (Form 1040)). and Pub. 550, Investment Income and
that shows the amount of contributions Expenses.
subject to the 50%, 30%, and 20%
Page 7
Line 12a—Interest Expense on respect to which section 42(j)(5) applies. ● Nonconventional source fuel credit.
Investment Debts All other low-income housing credits for ● Unused credits from cooperatives.
property placed in service before 1990 ● The credit for increasing research
Enter this amount on Form 4952 along will be reported on line 13b(2). Line
with your investment interest expense activities and orphan drug credit.
13b(3) will report the low-income Complete and attach to your return
from other sources to determine how housing credit for property placed in
much of your total investment interest is Form 6765, Credit for Increasing
service after 1989 with respect to which Research Activities.
deductible. section 42(j)(5) applies. All other
low-income housing credits for property ● Jobs credit. Complete and attach to
Lines 12b(1) and (2)—Investment your return Form 5884, Jobs Credit. See
placed in service after 1989 will be
Income and Investment Expenses reported on line 13b(4). Form 5884 for definitions, special rules,
Use the amounts on these lines to and limitations.
You must keep a separate record of
determine the amount to enter on Form the amount of low-income housing ● Credit for alcohol used as fuel.
4952. credit from each of these sources so Complete and attach to your return
Caution: The amounts shown on lines that you will be able to correctly Form 6478, Credit for Alcohol Used as
12b(1) and (2) include only investment compute any recapture of low-income Fuel.
income and expenses included on lines housing credit that may result from the ● Disabled access credit. Complete and
4 and 10 of this Schedule K-1. The disposition of all or part of your attach to your return Form 8826,
partnership should attach a schedule partnership interest. For more Disabled Access Credit.
that shows the amount of any information, see the Instructions for ● Enhanced oil recovery credit.
investment income and expenses Form 8586. Complete and attach to your return
included on any other lines of this Caution: You cannot claim the Form 8830, Enhanced Oil Recovery
Schedule K-1. Combine these items with low-income housing credit on any Credit.
lines 12b(1) and 12b(2) to determine qualified low-income housing project for ● Qualified electric vehicle credit.
your total investment income and total which any person was allowed any Complete and attach to your return
investment expenses from this benefit under section 502 of the Tax Form 8834, Qualified Electric Vehicle
partnership. Combine these totals with Reform Act of 1986. Credit.
investment income and expenses from
all other sources to determine the Line 13c—Qualified Rehabilitation ● Renewable electricity production
amount to enter on Form 4952. credit. Complete and attach to your
Expenditures Related to Rental return Form 8835, Renewable Electricity
Real Estate Activities Production Credit.
Credits The partnership should identify your The passive activity limitations may
Caution: If you have credits that are share of the partnership’s rehabilitation limit the amount of credits on lines 13b,
passive activity credits to you, you must expenditures that are related to each 13c, 13d, 13e, and 14 that you may
complete For m 8582-CR (or Form 8810 rental real estate activity. Enter the take. Lines 13b, 13c, 13d, and 13e
for corporations) in addition to the credit expenditures on the appropriate line of credits are related to the rental activities
for ms referenced below. See the Form 3468, Investment Credit, to figure of the partnership and are passive
Instructions for For m 8582-CR (or Form your allowable credit. activity credits to all partners. Line 14
8810) for more infor mation. credits are related to the trade or
Also, if you are entitled to claim more
Line 13d—Credits (Other Than business activities of the partnership
than one general business credit (i.e., Credits Shown on Lines 13b and and are passive activity credits to all
investment credit, jobs credit, credit for 13c) Related to Rental Real Estate partners who did not materially
alcohol used as fuel, research credit, Activities participate in the trade or business
low-income housing credit, enhanced oil The partnership will identify the type of activity. In general, credits from passive
recovery credit, and disabled access credit and any other information you activities are limited to the tax
credit), you must complete Form 3800, need to compute credits related to rental attributable to passive activities.
General Business Credit, in addition to real estate activities (other than the But if you actively participated in a
the credit for ms referenced below. If you low-income housing credit and qualified rental real estate activity, you may be
have more than one credit, see the rehabilitation expenditures). able to use the line 13d credits against
instructions for For m 3800 for more tax on other income. The amount of
infor mation. Line 13e—Credits Related to Other these credits you can use is limited to
Rental Activities their deduction equivalent up to $25,000
Line 13a—Credit for Income Tax (net of losses from rental real estate
Withheld The partnership will identify the type of
activities deductible against up to
credit and any other information you
Include the amount the partnership $25,000 of other income).
need to compute credits related to rental
reports to you in the total that you enter activities other than rental real estate You may also claim the credits on
on line 54, page 2, Form 1040. Be sure activities. lines 13b and 13c against tax on other
to check the box on line 54 and write income, subject to the same $25,000
“From Schedule K-1” in the margin. Line 14—Other Credits limitation, even if you did not actively
The partnership will identify the type of participate in a rental real estate activity.
Line 13b—Low-Income Housing Line 13e credits are limited to tax
Credit credit and any other information you
need to compute credits related to a attributable to passive activities. The
Your share of the partnership’s trade or business activity. Expenditures $25,000 deduction equivalent does not
low-income housing credit is shown on qualifying for the (a) rehabilitation credit apply to line 13e and line 14 credits.
line 13b. Any allowable credit is entered not related to rental real estate activities,
on Form 8586, Low-Income Housing (b) energy credit, or (c) reforestation Self-Employment
Credit. credit will be reported to you on line 23. If you and your spouse are both
The partnership will report separately Credits that may be reported on line partners, each of you must complete
on line 13b(1) that portion of the 13d, 13e, or 14 (depending on the type and file your own Schedule SE (Form
low-income housing credit for property of activity they relate to) include the 1040), Self-Employment Tax, to report
placed in service before 1990 with following:
Page 8
your partnership net earnings (loss) from amounts reported on lines 16d(1) and amount on Form 1040, line 8b. Increase
self-employment. 16d(2) and the amounts on the attached the adjusted basis of your interest in the
schedule to help you determine the net partnership by this amount.
Line 15a—Net Earnings (Loss) amount to enter on line 6f of Form 6251.
From Self-Employment Line 20—Other Tax-Exempt
Line 16e—Other Adjustments and Income
If you are a general partner, reduce this
amount before entering it on Schedule Tax Preference Items Increase the adjusted basis of your
SE (Form 1040) by any section 179 Enter the information on the schedule interest in the partnership by the amount
expense deduction claimed, attached by the partnership for line 16e shown on line 20, but do not include it
unreimbursed partnership expenses on the applicable lines of Form 6251. in income on your tax return.
claimed, and depletion claimed on oil
and gas properties. Do not reduce net Foreign Taxes Line 21—Nondeductible Expenses
earnings from self-employment by any The nondeductible expenses paid or
separately stated deduction for health Use the information on lines 17a through
incurred by the partnership are not
insurance expenses. 17g and attached schedules to figure
deductible on your tax return. Decrease
your foreign tax credit. For more
If the amount on this line is a loss, the adjusted basis of your interest in the
information, get Form 1116, Foreign Tax
enter only the deductible amount on partnership by this amount.
Credit—Individual, Fiduciary, or
Schedule SE (Form 1040). See
Nonresident Alien Individual, and the Lines 22a and 22b—Recapture of
Limitations on Losses, Deductions,
related instructions; Form 1118, Foreign Low-Income Housing Credit
and Credits on page 2.
Tax Credit—Corporations, and the
If your partnership is an options dealer related instructions; and Pub. 514, A section 42(j)(5) partnership will report
or a commodities dealer, see section Foreign Tax Credit for Individuals. recapture of a low-income housing credit
1402(i). on line 22a. All other partnerships will
If your partnership is an investment report recapture of a low-income
Other housing credit on line 22b. You must
club, see Rev. Rul. 75-525, 1975-2 C.B.
350. Lines 18a and 18b keep a separate record of recapture
from each of these sources so that you
Line 15b—Gross Farming or The partnership will show on line 18a will be able to correctly compute any
Fishing Income the total qualified expenditures to which recapture of low-income housing credit
an election under section 59(e) may that may result from the disposition of all
If you are an individual partner, enter the apply. It will identify the type of or part of your partnership interest. For
amount from this line on Schedule E expenditure on line 18b. If there is more more information, get Form 8611,
(Form 1040), Part V, line 41. You may than one type of expenditure, the Recapture of Low-Income Housing
also use this amount to figure net amount of each type will be listed on an Credit.
earnings from self-employment under attachment. Generally, section 59(e)
the farm optional method on Schedule allows each partner to elect to deduct
SE (Form 1040), Section B, Part II. certain expenses ratably over the Supplemental Information
number of years in the applicable period Line 23
Line 15c—Gross Nonfarm Income rather than deduct the full amount in the
If you are an individual partner, use this current year. Under the election, you Amounts included on line 23 are not
amount to figure net earnings from may deduct circulation expenditures included elsewhere such as:
self-employment under the nonfarm ratably over a 3-year period. Research 1. Taxes paid on undistributed capital
optional method on Schedule SE (Form and experimental expenditures and gains by a regulated investment
1040), Section B, Part II. mining exploration and development company. (Form 1040 filers enter your
costs qualify for a writeoff period of 10 share of these taxes on line 59, check
Adjustments and Tax years. Intangible drilling and the box for Form 2439, and add the
development costs may be deducted words “Form 1065.”)
Preference Items over a 60-month period, beginning with 2. Number of gallons of each fuel
Use the information reported on lines the month in which such costs were used during the tax year and the
16a through 16e (as well as your paid or incurred. If you make this appropriate tax rate for each type of use
adjustments and tax preference items election, these items are not treated as identified on Form 4136, Credit for
from other sources) to prepare your adjustments or tax preference items for Federal Tax Paid on Fuels, and in the
Form 6251, Alternative Minimum Tax— purposes of the alternative minimum tax. related instructions. Also your share of
Individuals; Form 4626, Alternative Make the election on Form 4562. the credit allowed for qualified
Minimum Tax—Corporations; or Because each partner decides diesel-powered highway vehicles. Use
Schedule H of Form 1041, U.S. whether to make the election under this information to complete Form 4136.
Fiduciary Income Tax Return. section 59(e), the partnership cannot 3. Your share of gross income from
provide you with the amount of the the property, share of production for the
Lines 16d(1) and 16d(2)—Gross adjustment or tax preference item tax year, etc., needed to figure your
Income From, and Deductions related to the expenses listed on line depletion deduction for oil and gas
Allocable to, Oil, Gas, and 18a. You must decide both how to claim wells. The partnership should also
Geothermal Properties the expenses on your return and allocate to you a share of the adjusted
The amounts reported on these lines compute the resulting adjustment or tax basis of each partnership oil or gas
include only the gross income from, and preference item. property. See Pub. 535 for how to figure
deductions allocable to, oil, gas, and your depletion deduction.
Line 19—Tax-Exempt Interest
geothermal properties that are included 4. Your share of the intangible drilling
Income
on line 1 of Schedule K-1. The and development costs shown on line
partnership should have attached a You must report on your return, as an 18a that is attributable to qualified
schedule that shows any income from or item of information, your share of the exploratory costs. Use this amount to
deductions allocable to such properties tax-exempt interest received or accrued compute the alternative minimum tax
that are included on lines 2 through 11 by the partnership during the year. adjustment based on energy
and line 23 of Schedule K-1. Use the Individual partners should report this
Page 9
preferences. See section 56(h) for more individual, report the interest on Form paragraphs (8) through (15) of section
details. 1040, line 53. Write “453(l)(3)” and the 512 (b)) for a partner that is a
5. Recapture of the section 179 amount of the interest on the dotted line tax-exempt organization.
expense deduction. If the recapture was to the left of line 53. Note: A partner is required to notify the
caused by a disposition of the property, 10. Any information you need to partnership of its tax-exempt status.
include the amount on Form 4797, line compute the interest due under section 14. Your share of expenditures
18. The recapture amount will be limited 453A(c) with respect to certain qualifying for the (a) rehabilitation credit
to the amount you deducted in earlier installment sales. If you are an individual, not related to rental real estate activities,
years. report the interest on Form 1040, line (b) energy credit, or (c) reforestation
6. Recapture of certain mining 53. Write “453A(c)” and the amount of credit. Enter the expenditures on the
exploration expenditures (section 617). the interest on the dotted line to the left appropriate line of Form 3468 to figure
of line 53. your allowable credit.
7. Any information or statements you
need to comply with requirements under 11. Any information you need to 15. Investment credit properties
section 6111 (regarding tax shelters) or compute the interest due or to be subject to recapture. Any information
section 6662(d)(2)(B)(ii) (regarding refunded under the look-back method of you need to figure your recapture tax on
adequate disclosure of items that may section 460(b)(2) on certain long-term Form 4255, Recapture of Investment
cause an understatement of income tax contracts. Use Form 8697, Interest Credit. See the Form 3468 on which you
on your return). Computation Under the Look-Back took the original credit for other
Method for Completed Long-Term information you need to complete Form
8. Farm production expenses. You
Contracts, to report any such interest. 4255.
may be eligible to elect to deduct these
expenses currently or capitalize them 12. Any information you need relating You may also need Form 4255 if you
under section 263A. Get Pub. 225, to interest expense that you are required disposed of more than one-third of your
Farmer’s Tax Guide, and Temporary to capitalize under section 263A for interest in a partnership.
Regulations section 1.263A-1T(c). production expenditures. See Notice 16. Any other information you may
88-99, 1988-2 C.B. 422, for more need to file your return not shown
9. Any information you need to
information. elsewhere on Schedule K-1.
compute the interest due under section
453(l)(3) with respect to the disposition 13. Any information you need to The partnership should give you a
of certain timeshares and residential lots compute unrelated business taxable description and the amount of your
on the installment method. If you are an income under section 512(a)(1) (but share for each of these items.
excluding any modifications required by

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