Partner'S Instructions For Schedule K-1 (Form 1065-B) - Partner'S Share Of Income (Loss) From An Electing Large Partnership (For Partner'S Use Only) - 2011 Page 2
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121.6031(c)-1T, or who furnishes incorrect
related person bears the economic risk of
Form 6198, At-Risk Limitations, to figure
information, is subject to a $100 penalty
loss.
your allowable loss.
for each failure. The maximum penalty is
The at-risk rules generally limit the
Elections
$1,500,000 for all such failures during a
amount of loss and other deductions that
calendar year. If the nominee intentionally
Generally, the partnership decides how to
you can claim to the amount you could
disregards the requirement to report
figure taxable income from its operations.
actually lose in the activity. However, if
correct information, each $100 penalty
However, two elections are made by you
you acquired your partnership interest
increases to $250 or, if greater, 10% of
separately on your income tax return and
before 1987, the at-risk rules do not apply
the aggregate amount of items required to
not by the partnership. These elections
to losses from an activity of holding real
be reported, and the $1,500,000
are made under the following code
property placed in service before 1987 by
maximum does not apply.
sections.
the partnership. The activity of holding
•
Section 108(b)(5) (election related to
mineral property does not qualify for this
International Boycotts
reduction of tax attributes due to
exception. The partnership should identify
exclusion from gross income of discharge
Every partnership that had operations in,
on an attached statement to Schedule
of indebtedness).
or related to, a boycotting country,
K-1 the amount of any losses that are not
•
Section 901 (foreign tax credit).
company, or a national of a country must
subject to the at-risk limitations.
file Form 5713, International Boycott
Additional Information
Generally, you are not at risk for
Report.
amounts such as the following.
For more information on the treatment of
•
If the partnership cooperated with an
Nonrecourse loans used to finance the
partnership income, deductions, credits,
international boycott, it must provide you
activity, to acquire property used in the
etc., see the following:
with a copy of its Form 5713. As a
activity, or to acquire your interest in the
•
Pub. 541, Partnerships;
general or limited partner, you must file
activity, that are not secured by your own
•
Pub. 535, Business Expenses; and
your own Form 5713 to report the
property (other than the property used in
•
Pub. 925, Passive Activity and At-Risk
partnership’s activities and any other
the activity). See the instructions for
Rules.
boycott operations that you may have.
Partner’s Share of Liabilities, later, for the
To get forms and publications, see the
You may lose certain tax benefits if the
exception for qualified nonrecourse
instructions for your tax return or visit the
partnership participated in, or cooperated
financing secured by real property.
•
IRS website at IRS.gov.
with, an international boycott. See Form
Cash, property, or borrowed amounts
5713 and its instructions for more
used in the activity (or contributed to the
Limitations on Losses,
information.
activity, or used to acquire your interest in
the activity) that are protected against
Deductions, and Credits
Definitions
loss by a guarantee, stop-loss agreement,
There are three separate potential
or other similar arrangement (excluding
limitations on the amount of partnership
General Partner
casualty insurance and insurance against
losses that you can deduct on your return.
tort liability).
A general partner is a partner who is
These limitations and the order in which
•
Amounts borrowed for use in the
personally liable for partnership debts.
you must apply them are as follows: the
activity from a person who has an interest
basis rules, the at-risk limitations, and the
Limited Partner
in the activity, other than as a creditor, or
passive activity limitations. Each of these
who is related, under section 465(b)(3), to
A limited partner is a partner in a
limitations is discussed separately below.
a person (other than you) having such an
partnership formed under a state limited
interest.
Basis Rules
partnership law, whose personal liability
for partnership debts is limited to the
Generally, you cannot claim your share of
You should get a separate statement
amount of money or other property that
a partnership loss (including a capital
of income, expenses, etc., for each
the partner contributed or is required to
loss) to the extent that it is greater than
activity from the partnership.
contribute to the partnership. Some
the adjusted basis of your partnership
Passive Activity Limitations
members of other entities, such as
interest at the end of the partnership’s tax
domestic or foreign business trusts or
year. Any losses and deductions not
Section 469 provides rules that limit the
limited liability companies that are
allowed this year because of the basis
deduction of certain losses and credits.
classified as partnerships, may be treated
limit can be carried forward indefinitely
These rules apply to partners who:
•
as limited partners for certain purposes.
and deducted in a later year subject to the
Are individuals, estates, trusts, closely
basis limit for that year.
held corporations (other than S
Disqualified Person
corporations), or personal service
The partnership is not responsible for
If you are a partner in a partnership
corporations and
keeping the information needed to figure
holding oil and gas properties, you are a
•
Have a passive activity loss or credit for
the basis of your partnership interest. You
“disqualified person” if:
the tax year.
can figure the adjusted basis of your
•
You are an oil or natural gas retailer
partnership interest by adding items that
Individuals, estates, and trusts. If you
described in section 613A(d)(2) or crude
increase your basis and then subtracting
have a passive activity loss or credit, use
oil refiner described in section 613A(d)(4)
items that decrease your basis.
Form 8582, Passive Activity Loss
or
Limitations, to figure your allowable
Use the worksheet on page 3 to figure
•
Your average daily production of
passive losses and Form 8582-CR,
the basis of your interest in the
domestic crude oil and natural gas
Passive Activity Credit Limitations, to
partnership.
exceeds 500 barrels for your tax year in
figure your allowable passive credits.
Note. Additional basis adjustments may
which the partnership’s tax year ends.
apply to partners claiming deductions for
See section 776(b) for more details.
If the publicly traded partnership
depletion. See chapter 9 of Pub. 535 for
!
(PTP) box on Schedule K-1 is
Note. Disqualified persons must report
details.
checked, do not report passive
items of income, gain, loss, deduction,
CAUTION
At-Risk Limitations
income (loss) from the partnership on
and credit attributable to partnership oil
Form 8582. See page 5 for the special
and gas properties as if the special rules
Generally, if you have (a) a loss or other
rules for PTPs.
for ELPs did not apply.
deduction from any activity carried on as
a trade or business or for the production
Corporations. Use Form 8810,
Nonrecourse Loans
of income by the partnership and (b)
Corporate Passive Activity Loss and
Nonrecourse loans are those liabilities of
amounts in the activity for which you are
Credit Limitations. See the instructions for
the partnership for which no partner or
not at risk, you will have to complete
more information.
-2-
Instructions for Schedule K-1 (1065-B)
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