2010 Partner'S Instructions For Schedule K-1 (Form 1065-B) - Department Of The Treasury Page 2
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12Note. Disqualified persons must report
Note. Additional basis adjustments may
items required to be reported, and the
$100,000 maximum does not apply.
items of income, gain, loss, deduction,
apply to partners claiming deductions for
and credit attributable to partnership oil
depletion. See chapter 9 of Pub. 535 for
For statements required to be made
and gas properties as if the special rules
details.
after 2010, the nominee is subject to a
for ELPs did not apply.
$100 penalty for each statement for which
At-Risk Limitations
a failure occurs. The maximum penalty is
Nonrecourse Loans
Generally, if you have (a) a loss or other
$1,500,000 for all such failures during a
deduction from any activity carried on as
Nonrecourse loans are those liabilities of
calendar year. If the nominee intentionally
a trade or business or for the production
the partnership for which no partner bears
disregards the requirement to report
of income by the partnership and (b)
the economic risk of loss.
correct information, each $100 penalty
amounts in the activity for which you are
increases to $250 or, if greater, 10% of
Elections
not at risk, you will have to complete
the aggregate amount of items required to
Form 6198, At-Risk Limitations, to figure
be reported, and the $1,500,000
Generally, the partnership decides how to
your allowable loss.
maximum does not apply.
figure taxable income from its operations.
The at-risk rules generally limit the
However, two elections are made by you
International Boycotts
amount of loss and other deductions that
separately on your income tax return and
you can claim to the amount you could
not by the partnership. These elections
Every partnership that had operations in,
actually lose in the activity. However, if
are made under the following code
or related to, a boycotting country,
you acquired your partnership interest
sections.
company, or a national of a country must
•
before 1987, the at-risk rules do not apply
Section 108(b)(5) (election related to
file Form 5713, International Boycott
to losses from an activity of holding real
reduction of tax attributes due to
Report.
property placed in service before 1987 by
exclusion from gross income of discharge
the partnership. The activity of holding
If the partnership cooperated with an
of indebtedness). This does not include
mineral property does not qualify for this
international boycott, it must provide you
the section 108(i) election (election to
with a copy of its Form 5713. As a
exception. The partnership should identify
defer and ratably include income arising
general or limited partner, you must file
on an attachment to Schedule K-1 the
from certain discharge of indebtedness).
•
your own Form 5713 to report the
amount of any losses that are not subject
Section 901 (foreign tax credit).
partnership’s activities and any other
to the at-risk limitations.
Additional Information
boycott operations that you may have.
Generally, you are not at risk for
You may lose certain tax benefits if the
amounts such as the following.
For more information on the treatment of
partnership participated in, or cooperated
•
Nonrecourse loans used to finance the
partnership income, deductions, credits,
with, an international boycott. See Form
activity, to acquire property used in the
etc., see the following:
5713 and its instructions for more
activity, or to acquire your interest in the
•
Pub. 541, Partnerships;
information.
activity, that are not secured by your own
•
Pub. 535, Business Expenses; and
property (other than the property used in
•
Pub. 925, Passive Activity and At-Risk
Definitions
the activity). See the instructions for
Rules.
Partner’s Share of Liabilities on page 6 for
General Partner
To get forms and publications, see the
the exception for qualified nonrecourse
instructions for your tax return or visit the
financing secured by real property.
A general partner is a partner who is
IRS website at IRS.gov.
•
Cash, property, or borrowed amounts
personally liable for partnership debts.
used in the activity (or contributed to the
Limitations on Losses,
Limited Partner
activity, or used to acquire your interest in
the activity) that are protected against
Deductions, and Credits
A limited partner is a partner in a
loss by a guarantee, stop-loss agreement,
partnership formed under a state limited
There are three separate potential
or other similar arrangement (excluding
partnership law, whose personal liability
limitations on the amount of partnership
casualty insurance and insurance against
for partnership debts is limited to the
losses that you can deduct on your return.
tort liability).
amount of money or other property that
These limitations and the order in which
•
Amounts borrowed for use in the
the partner contributed or is required to
you must apply them are as follows: the
activity from a person who has an interest
contribute to the partnership. Some
basis rules, the at-risk limitations, and the
in the activity, other than as a creditor, or
members of other entities, such as
passive activity limitations. Each of these
who is related, under section 465(b)(3), to
domestic or foreign business trusts or
limitations is discussed separately below.
a person (other than you) having such an
limited liability companies that are
interest.
classified as partnerships, may be treated
Basis Rules
as limited partners for certain purposes.
You should get a separate statement
Generally, you cannot claim your share of
For example, see Temporary Regulations
of income, expenses, etc., for each
a partnership loss (including a capital
section 1.469-5T(e)(3), which treats all
activity from the partnership.
loss) to the extent that it is greater than
members with limited liability as limited
the adjusted basis of your partnership
Passive Activity Limitations
partners for purposes of section 469(h)(2)
interest at the end of the partnership’s tax
(relating to the passive activity loss
Section 469 provides rules that limit the
year. Any losses and deductions not
limitation rules).
deduction of certain losses and credits.
allowed this year because of the basis
These rules apply to partners who:
Disqualified Person
limit can be carried forward indefinitely
•
Are individuals, estates, trusts, closely
and deducted in a later year subject to the
If you are a partner in a partnership
held corporations (other than S
basis limit for that year.
holding oil and gas properties, you are a
corporations), or personal service
“disqualified person” if:
The partnership is not responsible for
corporations and
•
keeping the information needed to figure
Have a passive activity loss or credit for
•
You are an oil or natural gas retailer
the basis of your partnership interest. You
the tax year.
described in section 613A(d)(2) or crude
can figure the adjusted basis of your
oil refiner described in section 613A(d)(4)
Individuals, estates, and trusts. If you
partnership interest by adding items that
or
have a passive activity loss or credit, use
increase your basis and then subtracting
•
Your average daily production of
Form 8582, Passive Activity Loss
items that decrease your basis.
domestic crude oil and natural gas
Limitations, to figure your allowable
exceeds 500 barrels for your tax year in
Use the worksheet on page 3 to figure
passive losses and Form 8582-CR,
which the partnership’s tax year ends.
the basis of your interest in the
Passive Activity Credit Limitations, to
See section 776(b) for more details.
partnership.
figure your allowable passive credits.
-2-
Instructions for Schedule K-1 (1065-B) (2010)
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