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you a description and the amount of your

Form 6781, Gains and Losses From

2. Your distributive share of the gain

share for each of these items.

Section 1256 Contracts and Straddles.

eligible for the section 1045 rollover

•

cannot exceed the amount that would

Gain from the sale or exchange of

Report loss items that are passive

have been allocated to you based on your

qualified small business stock (as defined

activity amounts to you following the

interest in the partnership at the time the

in the instructions for Schedule D) that is

Instructions for Form 8582. However, if

stock was acquired, and

eligible for the 50% section 1202

the box in Item H is checked, report the

exclusion. The partnership should also

3. You must purchase other qualified

loss following the rules for Publicly

give you the name of the corporation that

small business stock (as defined in the

traded partnerships on page 4.

issued the stock, your share of the

Instructions for Schedule D (Form 1040))

partnership’s adjusted basis and sales

during the 60-day period that began on

Report income or gain items that are

price of the stock, and the dates the stock

the date the stock was sold by the

passive activity amounts to you as

was bought and sold. Corporate partners

partnership.

instructed below.

are not eligible for the section 1202

See the instructions for Schedule D

The instructions given below tell you

exclusion. The following additional

(Form 1040) for details on how to report

where to report line 7 items if such items

limitations apply at the partner level:

the gain and the amount of the allowable

are not passive activity amounts.

1. You must have held an interest in

postponed gain.

the partnership when the partnership

Line 7 items may include the following:

•

acquired the qualified small busniess

Partnership gains from the disposition

Deductions

stock and at all times thereafter until the

of farm recapture property (see Form

partnership disposed of the qualified

4797) and other items to which section

Line 8—Charitable

small business stock.

1252 applies.

Contributions

•

2. Your distributive share of the

Income from recoveries of tax benefit

The partnership will give you a schedule

eligible section 1202 gain cannot exceed

items. A tax benefit item is an amount you

that shows the amount of contributions

the amount that would have been

deducted in a prior tax year that reduced

subject to the 50%, 30%, and 20%

allocated to you based on your interest in

your income tax. Report this amount on

limitations. For more details, see the

line 21 of Form 1040 to the extent it

the partnership at the time the stock was

Instructions for Schedule A (Form 1040).

reduced your tax.

acquired.

•

Gambling gains and losses.

See the instructions for Schedule D

If property other than cash is

(Form 1040) for details on how to report

1. If the partnership was not engaged

contributed and if the claimed deduction

the gain and the amount of the allowable

in the trade or business of gambling, (a)

for one item or group of similar items of

exclusion.

report gambling winnings on Form 1040,

property exceeds $5,000, the partnership

•

line 21 and (b) deduct gambling losses to

Gain eligible for section 1045 rollover

must give you a copy of Form 8283,

the extent of winnings on Schedule A, line

(replacement stock purchased by the

Noncash Charitable Contributions, to

27.

partnership). The partnership should also

attach to your tax return. Do not deduct

2. If the partnership was engaged in

give you the name of the corporation that

the amount shown on this form. It is the

the trade or business of gambling, (a)

issued the stock, your share of the

partnership’s contribution. Instead, deduct

report gambling winnings in Part II of

partnership’s adjusted basis and sales

the amount shown on line 8 of your

Schedule E and (b) deduct gambling

price of the stock, and the dates the stock

Schedule K-1 (Form 1065).

losses to the extent of winnings in Part II

was bought and sold. Corporate partners

of Schedule E.

are not eligible for the section 1045

•

If the partnership provides you with

Any income, gain, or loss to the

rollover. To qualify for the section 1045

information that the contribution was

partnership under section 751(b). Report

rollover:

property other than cash and does not

this amount on Form 4797, line 10.

1. You must have held an interest in

give you a Form 8283, see the

•

Specially allocated ordinary gain (loss).

the partnership during the entire period in

Instructions for Form 8283 for filing

Report this amount on Form 4797, line

which the partnership held the qualified

requirements. Do not file Form 8283

10.

small business stock (more than 6

•

unless the total claimed deduction for all

Net gain (loss) from involuntary

months prior to the sale) and

contributed items of property exceeds

conversions due to casualty or theft. The

$500.

2. Your distributive share of the gain

partnership will give you a schedule that

eligible for the section 1045 rollover

shows the amounts to be entered on

Charitable contribution deductions are

cannot exceed the amount that would

Form 4684, Casualties and Thefts, line

not taken into account in figuring your

have been allocated to you based on your

34, columns (b)(i), (b)(ii), and (c).

passive activity loss for the year. Do not

•

interest in the partnership at the time the

Net short-term capital gain or loss, net

enter them on Form 8582.

stock was acquired.

long-term capital gain or loss, and the

See the instructions for Schedule D

28% rate gain or loss from Schedule D

Line 9—Section 179 Expense

(Form 1040) for details on how to report

(Form 1065) that is not portfolio income.

Deduction

the gain and the amount of the allowable

An example is gain or loss from the

postponed gain.

disposition of nondepreciable personal

Use this amount, along with the total cost

•

property used in a trade or business

Gain eligible for section 1045 rollover

of section 179 property placed in service

activity of the partnership. Report total net

(replacement stock not purchased by the

during the year from other sources, to

short-term gain or loss on Schedule D

partnership). The partnership should also

complete Part I of Form 4562,

(Form 1040), line 5; total net long-term

give you the name of the corporation that

Depreciation and Amortization. Use Part I

capital gain or loss on Schedule D (Form

issued the stock, your share of the

of Form 4562 to figure your allowable

1040), line 12, column (f); and the 28%

partnership’s adjusted basis and sales

section 179 expense deduction from all

rate gain or loss on Schedule D (Form

price of the stock, and the dates the stock

sources. Report the amount on line 12 of

1040), line 12, column (g).

was bought and sold. Corporate partners

Form 4562 allocable to a passive activity

are not eligible for the section 1045

from the partnership using the

Any amount of long-term capital gain

rollover. To qualify for the section 1045

Instructions for Form 8582. However, if

from such property held more than 5

rollover:

the box in Item H is checked, report this

years will be indicated on an attachment

amount following the rules for Publicly

to Schedule K-1. Include this amount on

1. You must have held an interest in

traded partnerships on page 4. If the

line 4 of the worksheet for line 29 of

the partnership during the entire period in

amount is not a passive activity

Schedule D (Form 1040).

which the partnership held the qualified

•

Any net gain or loss from section 1256

small business stock (more than 6

deduction, report it on Schedule E (Form

contracts. Report this amount on line 1 of

months prior to the sale),

1040), Part II, column (j).

-7-

Partner’s Instructions for Schedule K-1 (Form 1065)

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Credits, Deductions, Etc. (For Partner'S Use Only) - 2001 Page 7

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