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type of expense, write “From Schedule K-1

Code M. Amounts paid for medical

the GO Zone for Hurricane Wilma (other

(Form 1065).”

insurance. Any amounts paid during the

than property located in the Katrina or Rita

tax year for insurance that constitutes

GO Zone).

These deductions are not taken into

medical care for you, your spouse, and your

The increased limitation does not apply if

account in figuring your passive activity loss

dependents. On line 29 of Form 1040, you

you held more than 500 acres of qualified

for the year. Do not enter them on Form

may be allowed to deduct such amounts,

timber property at any time during the tax

8582.

even if you do not itemize deductions. If you

year or if you are a real estate investment

Code J. Section 59(e)(2) expenditures.

do itemize deductions, enter on line 1 of

trust or a corporation the stock of which is

On an attached statement, the partnership

Schedule A (Form 1040) any amounts not

publicly traded on an established securities

will show the type and the amount of

deducted on line 29 of Form 1040.

market. See section 1400N(i)(1) for details.

qualified expenditures to which an election

If you did not materially participate in the

Code N. Educational assistance benefits.

under section 59(e) may apply. The

Deduct your educational assistance benefits

activity, use Form 8582 to determine how

statement will also identify the property for

on a separate line of Schedule E, line 28, up

much of these expenses can be reported on

which the expenditures were paid or

to the $5,250 limitation. If your benefits

Schedule E (Form 1040), line 28. If you

incurred. If there is more than one type of

materially participated in the reforestation

exceed $5,250, you may be able to use the

expenditure, the amount of each type will

activity, report the deduction on line 28,

excess amount on Form 8863 to figure the

also be listed.

education credits.

column (h), of Schedule E (Form 1040).

If you deduct these expenditures in full in

Code T. Domestic production activities

Code O. Dependent care benefits. The

the current year, they are treated as

information. The partnership will provide

partnership will report the dependent care

adjustments or tax preference items for

you with a statement with information that

benefits you received. You must use Form

purposes of alternative minimum tax.

you must use to figure the domestic

2441, line 12, to figure the amount, if any, of

Generally, section 59(e) allows each partner

production activities deduction. Use Form

the benefits you may exclude from your

to elect to amortize these expenditures over

8903, Domestic Production Activities

income.

the number of years in the applicable period

Deduction, to figure this deduction. See the

rather than deduct the full amount in the

Code P. Preproductive period expenses.

Instructions for Form 8903 for more details.

current year. If you make this election, these

You may be eligible to elect to deduct these

Code U. Qualified production activities

items are not treated as adjustments or tax

expenses currently or capitalize them under

income (QPAI). Report the QPAI reported

preference items.

section 263A. See Pub. 225, Farmer’s Tax

to you by the partnership (in box 13 of

Guide, and Regulations section 1.263A-4.

Under this election, you may deduct

Schedule K-1) on line 7 of Form 8903.

circulation expenditures ratably over a

Code Q. Commercial revitalization

Code V. Employer’s W-2 wages. Report

3-year period. Research and experimental

deductions from rental real estate

the portion of W-2 wages reported to you by

expenditures and mining exploration and

activities. Follow the Instructions for Form

the partnership (in box 13 of Schedule K-1)

development costs may be amortized over a

8582 to figure how much of the deduction

on line 13 of Form 8903.

10-year period. Intangible drilling and

can be reported on Schedule E, line 28,

development costs may be amortized over a

column (f).

Code W. Other deductions. Amounts with

60-month period, beginning with the month

this code may include:

Code R. Pensions and IRAs. Payments

•

in which such costs were paid or incurred.

Itemized deductions (Form 1040 filers

made on your behalf to an IRA, qualified

enter on Schedule A (Form 1040)).

Make the election on Form 4562. If you

plan, simplified employee pension (SEP), or

•

Soil and water conservation expenditures.

make the election, report the current year

a SIMPLE IRA plan. See Form 1040

See section 175 for limitations on the

amortization of section 59(e) expenditures

instructions for line 25 to figure your IRA

amount you are allowed to deduct.

from Part VI of Form 4562 on line 28 of

deduction. Enter payments made to a

•

Expenditures for the removal of

Schedule E (Form 1040). If you do not make

qualified plan, SEP, or SIMPLE IRA plan on

architectural and transportation barriers to

the election, report the section 59(e)(2)

Form 1040, line 32. If the payments to a

the elderly and disabled that the partnership

expenditures on line 28 of Schedule E

qualified plan were to a defined benefit plan,

elected to treat as a current expense. The

(Form 1040) and compute the resulting

the partnership should give you a statement

deductions are limited by section 190(c) to

adjustment or tax preference item (see Form

showing the amount of the benefit accrued

$15,000 per year from all sources.

6251, Alternative Minimum Tax —

for the current tax year.

•

Interest expense allocated to

Individuals). Whether you deduct the

Code S. Reforestation expense

debt-financed distributions. The manner in

expenditures or elect to amortize them,

deduction. The partnership will provide a

which you report such interest expense

report the amount on a separate line in

statement that describes the qualified timber

depends on your use of the distributed debt

column (h) of line 28 if you materially

property for these reforestation expenses.

proceeds. If the proceeds were used in a

participated in the partnership activity. If you

Generally, the expense deduction is limited

trade or business activity, report the interest

did not materially participate, follow the

to $10,000 ($5,000 if married filing

on line 28 of Schedule E (Form 1040). In

Instructions for Form 8582 to figure how

separately) for each qualified timber

column (a) enter the name of the

much of the deduction can be reported in

property, including your distributive share of

partnership and “interest expense.” If you

column (f).

the partnership’s expense and any

materially participated in the trade or

Code K. Deductions — portfolio

reforestation expenses you separately paid

business activity, enter the amount of

(2% floor). Amounts entered with this code

or incurred during the tax year.

interest expense in column (h). If you did not

are deductions that are clearly and directly

However, the limitation for the

materially participate in the activity, follow

allocable to portfolio income (other than

reforestation expense deduction is

the instructions for Form 8582 to determine

investment interest expense and section

increased for qualified timber property

the amount of interest expense you can

212 expenses from a REMIC). Generally,

located in the Gulf Opportunity Zones (GO

report in column (f). See page 3 for a

you should enter these amounts on

Zones) for hurricanes Katrina, Rita, and

definition of material participation. If the

Schedule A (Form 1040), line 22. See the

Wilma. The $10,000 limitation for each

proceeds were used in an investment

instructions for Schedule A, lines 22 and 27,

property is increased by the lesser of (a)

activity, enter the interest on Form 4952. If

for more information.

$10,000 or (b) the amount of qualified

the proceeds are used for personal

These deductions are not taken into

reforestation expenses paid or incurred by

purposes, the interest is generally not

account in figuring your passive activity loss

the partnership during the following periods.

deductible.

•

for the year. Do not enter them on Form

August 28, 2005, through December 31,

Interest paid or accrued on debt properly

8582.

2007, for qualified timber property located in

allocable to your share of a working interest

Code L. Deductions — portfolio (other).

the GO Zone for Hurricane Katrina.

in any oil or gas property (if your liability is

•

Generally, you should enter these amounts

September 23, 2005, through December

not limited). If you did not materially

on Schedule A (Form 1040), line 27. See

31, 2007, for qualified timber property

participate in the oil or gas activity, this

the instructions for Schedule A, lines 22 and

located in the GO Zone for Hurricane Rita

interest is investment interest reportable as

27, for more information. These deductions

(other than property located in the Katrina

described on page 8; otherwise, it is trade or

are not taken into account in figuring your

GO Zone).

business interest. If you did not materially

•

passive activity loss for the year. Do not

October 23, 2005, through December 31,

participate in the oil or gas activity, this

enter them on Form 8582.

2007, for qualified timber property located in

interest is investment interest expense and

-9-

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 9

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