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) - 2004 Page 10
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10If you contributed appreciated property
Replacement stock has not been
extraterritorial income exclusion, the
to the partnership within 5 years of a
purchased by the partnership. The
partnership met the foreign economic
distribution of other property to you, and
partnership should also give you the
process requirements and claimed the
the fair market value of the other property
name of the corporation that issued the
exclusion when figuring your distributive
exceeded the adjusted basis of your
stock, your share of the partnership’s
share of partnership income. You also
partnership interest immediately before
adjusted basis and sales price of the
may need to know the amount of your
the distribution (reduced by any cash
stock, and the dates the stock was bought
distributive share of foreign trading gross
received in the distribution), you may
and sold. Corporate partners are not
receipts from this partnership to
have to recognize gain on the appreciated
eligible for the section 1045 rollover. To
determine if you met the $5 million or less
property. For property contributed after
qualify for the section 1045 rollover:
exception discussed above for purposes
June 8, 1997, the 5-year period is
of qualifying for an extraterritorial income
1. You must have held an interest in
generally extended to 7 years. See
exclusion from other sources.
the partnership during the entire period in
section 737 for details.
which the partnership held the qualified
Note. Upon request, the partnership
Code N7. Gain eligible for section 1202
should furnish you a copy of the
small business stock (more than 6
exclusion. This gain from the sale or
partnership’s Form 8873 if there is a
months prior to the sale),
exchange of qualified small business
2. Your distributive share of the gain
reduction for international boycott
stock (as defined in the Instructions for
operations, illegal bribes, kickbacks, etc.
eligible for the section 1045 rollover
Schedule D) is eligible for the partial
cannot exceed the amount that would
Code Q. Inversion Gain
section 1202 exclusion. The partnership
have been allocated to you based on your
The partnership will provide a statement
should also give you the name of the
interest in the partnership at the time the
showing the amounts of each type of
corporation that issued the stock, your
stock was acquired, and
income or gain that is included in
share of the partnership’s adjusted basis
3. You must purchase other qualified
inversion gain. The partnership has
and sales price of the stock, and the
small business stock (as defined in the
included inversion gain in income
dates the stock was bought and sold.
Instructions for Schedule D (Form 1040))
elsewhere on Schedule K-1. Inversion
Corporate partners are not eligible for the
during the 60-day period that began on
gain is also reported under Code Q
section 1202 exclusion. The following
the date the stock was sold by the
because your taxable income and
additional limitations apply at the partner
partnership.
alternative minimum taxable income
level.
See the Instructions for Schedule D
cannot be less than the inversion gain.
1. You must have held an interest in
(Form 1040) for details on how to report
Also, your inversion gain (a) is not taken
the partnership when the partnership
the gain and the amount of the allowable
into account in figuring the amount of net
acquired the qualified small business
postponed gain.
operating loss (NOL) for the tax year or
stock and at all times thereafter until the
the amount of NOL that can be carried
Code O. Unrecaptured Section
partnership disposed of the qualified
over to each tax year, (b) may limit the
small business stock.
1250 Gain
amount of your credits, and (c) is treated
2. Your distributive share of the
Report this gain on line 11 of the
as income from sources within the U.S.
eligible section 1202 gain cannot exceed
Unrecaptured Section 1250 Gain
for the foreign tax credit. See section
the amount that would have been
Worksheet on page D-8 of the
7874 for details.
allocated to you based on your interest in
Instructions for Schedule D (Form 1040).
Code R. Commercial Revitalization
the partnership at the time the stock was
Do not report the gain on line 5 as stated
acquired.
Deduction
in the worksheet instructions.
Follow the instructions on Form 8582 for
See the Instructions for Schedule D
Codes P1 and P2. Extraterritorial
commercial revitalization deductions from
(Form 1040) for details on how to report
Income Exclusion
rental real estate activities to figure how
the gain and the amount of the allowable
a. Partnership did not claim the
much of the deduction can be reported on
exclusion.
exclusion. If the partnership reports your
Schedule E (Form 1040), line 28, column
Code N8. Gain eligible for section 1045
(f).
distributive share of foreign trading gross
rollover – stock replaced. This gain is
receipts (Code P1) and the extraterritorial
Disclosure of Reportable
eligible for the section 1045 rollover.
income exclusion (Code P2), the
Transactions
Replacement stock has been purchased
partnership was not entitled to claim the
by the partnership. The partnership
The partnership will report any
exclusion because it did not meet the
should also give you the name of the
information you need to complete a
foreign economic process requirements.
corporation that issued the stock, your
disclosure statement for reportable
You may still qualify for your distributive
share of the partnership’s adjusted basis
transactions in which the partnership
share of this exclusion if the partnership’s
and sales price of the stock, and the
participates. If the partnership participates
foreign trading gross receipts for the tax
dates the stock was bought and sold.
in a transaction that must be disclosed on
year were $5 million or less. To qualify for
Corporate partners are not eligible for the
Form 8886, Reportable Transaction
this exclusion, your foreign trading gross
section 1045 rollover. To qualify for the
Disclosure Statement, both you and the
receipts from all sources for the tax year
section 1045 rollover:
partnership may be required to file Form
also must have been $5 million or less. If
1. You must have held an interest in
8886 for the transaction. The
you qualify for the exclusion, limited
the partnership during the entire period in
determination of whether you are required
partners must report the extraterritorial
which the partnership held the qualified
to disclose a transaction of the
exclusion amount (Code P2) as a
small business stock (more than 6
partnership is based on the category(s)
deduction reducing the amount reported
months prior to the sale) and
under which the transaction qualifies for
in box 1 (see the box 1 instructions on
2. Your distributive share of the gain
disclosure and is determined by the
page 6). General partners who qualify for
eligible for the section 1045 rollover
partnership. See the Instructions for Form
the exclusion must report the Code P2
cannot exceed the amount that would
8886 for details.
amount in accordance with the
have been allocated to you based on your
instructions for box 9, Code A1, B1, or
Other
interest in the partnership at the time the
C1, whichever applies. See Form 8873,
Any other information you may need to
stock was acquired.
Extraterritorial Income Exclusion, for more
file with your return not shown elsewhere
information.
See the Instructions for Schedule D
on Schedule K-1. The partnership should
b. Partnership claimed the exclusion. If
(Form 1040) for details on how to report
give you a description and the amount of
the partnership reports your distributive
the gain and the amount of the allowable
your share for each of these items.
share of foreign trading gross receipts
postponed gain.
(Code P1) but not the amount of the
Code N9. Gain eligible for section 1045
rollover – stock not replaced. This gain
is eligible for the section 1045 rollover.
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