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activity rules do apply, report the amounts

separately and you lived apart from your

shown as indicated in these instructions.

spouse all year).

Income (Loss)

e. If you are a married person filing

separately, you lived apart from your spouse

If you are not an individual, report the

all year.

Box 1. Ordinary Business

amounts in each box as instructed on your

f. You have no current or prior year

tax return.

Income (Loss)

unallowed credits from a passive activity.

The amount reported for box 1 is your share

g. Your modified adjusted gross income

The line numbers in the summarized

of the ordinary income (loss) from the trade

was not more than $100,000 (not more than

reporting information on page 2 of Schedule

or business activities of the partnership.

$50,000 if married filing separately and you

K-1 are references to forms in use for

Generally, where you report this amount on

lived apart from your spouse all year).

calendar year 2005. If you file your tax

Form 1040 depends on whether the amount

h. Your interest in the rental real estate

return on a calendar year basis, but your

is from an activity that is a passive activity to

activity was not held as a limited partner.

partnership files a return for a fiscal year,

you. If you are an individual partner filing

2. If you have a loss from a passive

enter the amounts on your tax return for the

your 2005 Form 1040, find your situation

activity in box 2 and you do not meet all the

year in which the partnership’s fiscal year

below and report your box 1 income (loss)

conditions in 1 above, report the loss

ends. For example, if the partnership’s tax

as instructed, after applying the basis and

following the Instructions for Form 8582 to

year ends in February 2006, report the

at-risk limitations on losses. If the

figure how much of the loss you can report

amounts on your 2006 tax return.

partnership had more than one trade or

on Schedule E (Form 1040), line 28, column

business activity, it will attach a statement

(f). However, if the box in item D is checked,

that will identify the amount of income or

report the loss following the rules for

If you have losses, deductions, or credits

loss from each activity.

Publicly traded partnerships on page 4.

from a prior year that were not deductible or

3. If you were a real estate professional

usable because of certain limitations, such

1. Report box 1 income (loss) from

and you materially participated in the

as the basis rules or the at-risk limitations,

partnership trade or business activities in

activity, report box 2 income (loss) on

which you materially participated on

take them into account in determining your

Schedule E (Form 1040), line 28, column (h)

net income, loss, or credits for this year.

or (j).

However, except for passive activity losses

4. If you have income from a passive

and credits, do not combine the prior-year

2. Report box 1 income (loss) from

activity in box 2, enter the income on

amounts with any amounts shown on this

partnership trade or business activities in

Schedule E, line 28, column (g). However, if

which you did not materially participate, as

Schedule K-1 to get a net figure to report on

the box in item D is checked, report the

follows:

any supporting schedules, statements, or

income following the rules for Publicly

forms attached to your return. Instead,

a. If income is reported in box 1, report

traded partnerships on page 4.

report the amounts on the attached

the income on Schedule E, line 28, column

schedule, statement, or form on a

(g). However, if the box in item D is

Box 3. Other Net Rental Income

year-by-year basis.

checked, report the income following the

(Loss)

rules for Publicly traded partnerships on

page 4.

If the partnership reports a section 743(b)

The amount in box 3 is a passive activity

b. If a loss is reported in box 1, follow

adjustment to partnership items, report

amount for all partners. If the partnership

the Instructions for Form 8582 to figure how

these adjustments as separate items on

had more than one rental activity, it will

much of the loss can be reported on

Form 1040 in accordance with the reporting

attach a statement that will identify the

Schedule E, line 28, column (f). However, if

instructions for the partnership item being

amount of income or loss from each activity.

the box in item D is checked, report the loss

adjusted. A section 743(b) adjustment

Report the income or loss as follows.

following the rules for Publicly traded

increases or decreases your distributive

1. If box 3 is a loss, follow the

partnerships on page 4.

share of income, deduction, gain, or loss for

Instructions for Form 8582 to figure how

a partnership item. For example, if the

much of the loss can be reported on

partnership reports a section 743(b)

Box 2. Net Rental Real Estate

Schedule E, line 28, column (f). However, if

adjustment to depreciation for property used

the box in item D is checked, report the loss

Income (Loss)

in its trade or business, report the

following the rules for Publicly traded

adjustment on line 28 of Schedule E (Form

Generally, the income (loss) reported in box

partnerships on page 4.

1040) in accordance with the instructions for

2 is a passive activity amount for all

2. If income is reported on box 3, report

Box 1 of Schedule K-1.

partners. However, the income (loss) in box

the income on Schedule E (Form 1040), line

2 is not from a passive activity if you were a

28, column (g). However, if the box in item D

real estate professional (defined on page 3)

is checked, report the income following the

If you have amounts other than

and you materially participated in the

rules for Publicly traded partnerships on

those shown on Schedule K-1 to

activity. If the partnership had more than

page 4.

report on Schedule E (Form 1040),

CAUTION

one real estate rental activity, it will attach a

enter each item separately on line 28 of

statement that will identify the amount of

Box 4. Guaranteed Payments

Schedule E.

income or loss from each activity.

Generally, amounts on this line are not

If you are filing a 2005 Form 1040, use

passive income, and you should report them

Codes. In box 11 and boxes 13 through 20,

the following instructions to determine where

on Schedule E (Form 1040), line 28, column

the partnership will identify each item by

to enter a box 2 amount:

(j) (for example, guaranteed payments for

entering a code in the column to the left of

personal services).

the dollar amount entry space. These codes

1. If you have a loss from a passive

are identified on page 2 of Schedule K-1

activity in box 2 and you meet all of the

Portfolio Income

and in these instructions.

following conditions, enter the loss on

Schedule E (Form 1040), line 28, column (f).

Portfolio income or loss (shown in boxes 5

a. You actively participated in the

Attached statements. The partnership will

through 9b and in box 11, code A) is not

partnership rental real estate activities. See

enter an asterisk (*) after the code, if any, in

subject to the passive activity limitations.

Special allowance for a rental real estate

the column to the left of the dollar amount

Portfolio income includes income not

activity on page 4.

entry space for each item for which it has

derived in the ordinary course of a trade or

b. Rental real estate activities with

attached a statement providing additional

business from interest, ordinary dividends,

active participation were your only passive

information. For those informational items

annuities, or royalties and gain or loss on

activities.

the sale of property that produces such

that cannot be reported as a single dollar

income or is held for investment.

amount, the partnership will enter an

c. You have no prior year unallowed

asterisk in the left column and write “STMT”

losses from these activities.

Box 5. Interest Income

in the dollar amount entry space to indicate

d. Your total loss from the rental real

the information is provided on an attached

estate activities was not more than $25,000

Report interest income on line 8a of Form

statement.

(not more than $12,500 if married filing

1040.

-6-

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

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2005 Page 6

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