K1 reporting

Submitted by James Long on Sun, 2024-03-17 12:17

I’ve received K1s in the past. Since there were no distributions I didn’t report them on my tax return. I’m listed as a general partner in a LLC where I buy shares in pre ipo companies. In 2023 I had distributions. I received k1 form 1065. So there are amounts listed on 9a and 19. The amounts are less than my beginning capital. In my H&R Block tax software in the interview it doesn’t ask for beginning capital. So I am paying taxes on the line 9a. I read that if distributions are less than beginning capital you don’t file the k1. To just keep records. And file once you go over BC. Also are any trading fees deductible? There is no record on the K1 I paid fees. Where would I record fees? Box 16 is checked, k3 attached. On k3 all boxes are checked no. How do I proceed?



Submitted by James Long on Sun, 2024-03-17 12:48

Quick edit: I’m actually not sure if tax calculated was on 9a or 19.? And disregard the fee question as line 19 subtracted the fee in total distribution.

Submitted by James Long on Sun, 2024-03-17 19:54

2nd edit: I’m guessing, after further review, since the k1 shows my bc has now decreased and shows ending capital account decreased the tax must be correct that has been calculated off of 9a and 19. So I guess everything is correct the way it was done. How important is it to input K1s onto return that have no distributions? Thank you.

Submitted by James Long on Sun, 2024-03-17 23:54

3rd edit: I had a stock loss that was greater than $3k. My k1 earnings are much greater. It doesn’t look like they offset. My return shows -$3k in losses. These obviously don’t offset, correct?

Submitted by PaulC on Mon, 2024-03-18 16:16

Just relying on general principles, income reported on a K-1 (Form 1065) must be included on your tax return. Income, and other reportable information, could be contained in any number of the K-1 boxes. Receiving a distribution is not necessarily linked to K-1 income. It’s possible to have reportable income without a distribution, and vice versa. Likewise, having a distribution is absolutely not the sole prerequisite for reporting K-1 income. There can be income without any distribution.

Based on the questions you’re asking, it seems you could benefit from a tax professional who could explain what’s happening as opposed to watching your refund amount on H&R Block go up and down in response to entries. They could explain the interplay of the K-1 income and your stock loss, which I assume is separate.

If you’re doing pre-IPO investing, I think a tax pro could really add value, especially on the planning side when it comes to discretionary actions such as realizing capital gains or losses to manage the tax impact. H&R Block software isn’t going to do that for you. I was a practicing EA (Enrolled Agent) for 15 years, so I have a bias.

Submitted by James Long on Mon, 2024-03-18 17:58

You’re not wrong. Anything k1 related is appreciated. Thx.

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