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the section 1202 exclusion. The following

disposition of nondepreciable personal

deduction for all contributed items of

additional limitations apply at the partner

property used in a trade or business activity

property exceeds $500.

level:

of the partnership. Report total net

Food inventory contributions. The

short-term gain (loss) on Schedule D (Form

1. You must have held an interest in the

partnership will report on an attached

1040), line 5, column (f). Report the total net

partnership when the partnership acquired

statement your distributive share of qualified

long-term gain (loss) on Schedule D (Form

the qualified small business stock and at all

food inventory contributions. The food

1040), line 12, column (f).

times thereafter until the partnership

inventory contribution is not included in the

•

Interest income from the clean renewable

disposed of the qualified small business

amount reported in box 13 using code C.

energy bond credit and the gulf bond credit.

stock.

The partnership will also report your

See the instructions for line 9 of Form 8912,

distributive share of the partnership’s net

2. Your distributive share of the eligible

Clean Renewable Energy Bond Credit and

section 1202 gain cannot exceed the

income from the business activities that

Gulf Bond Credit for details.

made the food inventory contribution(s).

amount that would have been allocated to

Your deduction for food inventory

you based on your interest in the

contributions cannot exceed 10 percent of

partnership at the time the stock was

Deductions

your aggregate net income for the tax year

acquired.

from the business activities from which the

See the Instructions for Schedule D

food inventory contribution was made

(Form 1040) for details on how to report the

Box 12. Section 179 Deduction

(including your share of net income from

gain and the amount of the allowable

Use this amount, along with the total cost of

partnership or S corporation businesses that

exclusion.

•

section 179 property placed in service

made food inventory contributions). Report

Gain eligible for section 1045 rollover

during the year from other sources, to

the deduction for the food inventory

(replacement stock purchased by the

complete Part I of Form 4562, Depreciation

contribution on line 16 of Schedule A (Form

partnership). The partnership should also

and Amortization. Use Part I of Form 4562

1040).

give you the name of the corporation that

to figure your allowable section 179 expense

issued the stock, your share of the

Code D. Noncash contributions (30%).

deduction from all sources. Report the

partnership’s adjusted basis and sales price

Report this amount, subject to the 30% AGI

amount on line 12 of Form 4562 allocable to

of the stock, and the dates the stock was

limitation, on line 16 of Schedule A (Form

a passive activity from the partnership using

bought and sold. Corporate partners are not

1040).

the Instructions for Form 8582. If the amount

eligible for the section 1045 rollover. To

Code E. Capital gain property to a 50%

is not a passive activity deduction, report it

qualify for the section 1045 rollover:

organization (30%). Report this amount,

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

1. You must have held an interest in the

subject to the 30% AGI limitation, on line 16

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

partnership during the entire period in which

of Schedule A (Form 1040). See Special

report this amount following the rules for

the partnership held the qualified small

30% Limit for Capital Gain Property in Pub.

Publicly traded partnerships on page 4.

business stock (more than 6 months prior to

526.

the sale) and

Box 13. Other Deductions

Code F. Capital gain property (20%).

2. Your distributive share of the gain

Report this amount, subject to the 20% AGI

Contributions. Codes A through G. The

eligible for the section 1045 rollover cannot

limitation, on line 16 of Schedule A (Form

partnership will give you a schedule that

exceed the amount that would have been

1040).

shows the amount of contributions subject to

allocated to you based on your interest in

Code G. Cash contributions (100%). The

the 100%, 50%, 30%, and 20% adjusted

the partnership at the time the stock was

partnership will report your distributive share

gross income limitations. For more details,

acquired.

of qualified cash contributions. You can

see Pub. 526, Charitable Contributions, and

See the Instructions for Schedule D

elect to deduct 100% of these contributions

the instructions for Schedule A (Form 1040).

(Form 1040) for details on how to report the

on line 15b of Schedule A (Form 1040). If

If your contributions are subject to more

gain and the amount of the allowable

you do not make this election, add this

than one of the AGI limitations, see

postponed gain.

amount to the cash contributions reported in

•

Worksheet 2. Applying the Deduction Limits

Gain eligible for section 1045 rollover

box 13 using code A and enter the total

in Pub. 526.

(replacement stock not purchased by the

amount, subject to a 50% AGI limitation, on

partnership). The partnership should also

Charitable contribution deductions are

line 15a of Schedule A (Form 1040). If you

give you the name of the corporation that

not taken into account in figuring your

are a corporation (other than an S

issued the stock, your share of the

passive activity loss for the year. Do not

corporation), the partnership will report

partnership’s adjusted basis and sales price

enter them on Form 8582.

qualified cash contributions that were

of the stock, and the dates the stock was

Code A. Cash contributions (50%). Enter

donated for relief efforts related to Hurricane

bought and sold. Corporate partners are not

this amount subject to the 50% AGI

Katrina, Hurricane Rita, and Hurricane

eligible for the section 1045 rollover. To

limitation on line 15a of Schedule A (Form

Wilma. The corporation can elect to deduct

qualify for the section 1045 rollover:

1040).

these contributions without regard to the

1. You must have held an interest in the

10% limitation (see the Instructions for

Code B. Cash contributions (30%).

partnership during the entire period in which

Forms 1120 and 1120-A, line 19).

Report this amount, subject to the 30% AGI

the partnership held the qualified small

Code H. Investment interest expense.

limitation, on line 15a of Schedule A (Form

business stock (more than 6 months prior to

Enter this amount on Form 4952, line 1. If

1040).

the sale),

the partnership has investment income or

Code C. Noncash contributions (50%). If

2. Your distributive share of the gain

other investment expense, it will report your

property other than cash is contributed and

eligible for the section 1045 rollover cannot

share of these items in box 20 using codes

if the claimed deduction for one item or

exceed the amount that would have been

A and B. Include investment income and

group of similar items of property exceeds

allocated to you based on your interest in

expenses from other sources to figure how

$5,000, the partnership must give you a

the partnership at the time the stock was

much of your total investment interest is

copy of Form 8283, Noncash Charitable

acquired, and

deductible. You will also need this

Contributions, to attach to your tax return.

3. You must purchase other qualified

information to figure your investment interest

Do not deduct the amount shown on this

small business stock (as defined in the

expense deduction.

form. It is the partnership’s contribution.

Instructions for Schedule D (Form 1040))

If the partnership paid or accrued interest

Instead, deduct the amount identified by

during the 60-day period that began on the

on debts properly allocable to investment

code C, box 13, subject to the 50% AGI

date the stock was sold by the partnership.

property, the amount of interest you are

limitation, on line 16 of Schedule A (Form

See the Instructions for Schedule D

allowed to deduct may be limited.

1040).

(Form 1040) for details on how to report the

For more information and the special

gain and the amount of the allowable

If the partnership provides you with

provisions that apply to investment interest

postponed gain.

information that the contribution was

•

expense, see Form 4952 and Pub. 550.

Net short-term capital gain (loss) and net

property other than cash and does not give

long-term capital gain (loss) from Schedule

you a Form 8283, see the Instructions for

Code I. Deductions — royalty income.

D (Form 1065) that is not portfolio income.

Form 8283 for filing requirements. Do not

Enter deductions allocable to royalties on

An example is gain or loss from the

file Form 8283 unless the total claimed

Schedule E (Form 1040), line 18. For this

-8-

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 8

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