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 9
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10a separate line in Part II is needed on
Code M. Oil and Gas Activities
share of the gain on the securities
Form 1116.
distributed to you).
Generally, oil and gas income,
•
The partnership’s adjusted basis of
Code L2. Gross income from all
deductions, credits, and other items are
those securities immediately before the
sources. Enter this amount on line 3e of
included in your distributive share of
distribution.
Form 1116.
income or loss from passive loss
limitation activities, general credits, and
Code L3. Gross income sourced at
Decrease the adjusted basis of your
the alternative minimum tax adjustment.
partner level. Although all this income
interest in the partnership (but not below
However, distributive shares of all oil and
reported has been apportioned to foreign
zero) by the amount of cash distributed to
gas income, deductions, credits, and
source categories of income, you must
you and the partnership’s adjusted basis
other items are separately reported to
nevertheless determine whether the
of the distributed securities. Advances or
partners who are disqualified persons
income being reported is U.S. source
drawings of money or property against
(defined on page 2) in accordance with
income or foreign source income. See
your distributive share are treated as
the regular partnership rules, here or on
page 5 of the Instructions for Form 1116
current distributions made on the last day
an attached schedule.
for the rules to source the income
of the partnership’s tax year.
reported to you. Enter only foreign source
A partner must notify the partnership of
Your basis in the distributed
income on lines 1 and 3d of Form(s)
its status as a disqualified person.
marketable securities (other than in
1116. A separate Form 1116 or 1118 is
liquidation of your interest) is the smaller
Codes N1 Through N9.
required for each foreign source category
of:
Miscellaneous
of income. Do not include income that you
•
The partnership’s adjusted basis in the
determined to be U.S. source income.
Code N1. Other tax-exempt income.
securities immediately before the
Codes L4(a) Through L4(c). Foreign
Increase the adjusted basis of your
distribution increased by any gain
gross income sourced at partnership
interest in the partnership by the amount
recognized on the distribution of the
level. The following types of income have
shown in box 9, Code N1, but do not
securities or
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already been sourced for you by the
include it in income on your tax return.
The adjusted basis of your partnership
partnership. Include these amounts on
interest reduced by any cash distributed
Code N2. Nondeductible expenses.
lines 1 and 3d of the applicable Forms
in the same transaction and increased by
The nondeductible expenses paid or
1116 (that is, the Forms 1116 for each
any gain recognized on the distribution of
incurred by the partnership are not
category of income provided to you).
the securities.
•
deductible on your tax return. Decrease
Code L4(a). Passive foreign source
the adjusted basis of your interest in the
If you received the securities in
income.
•
partnership by this amount.
liquidation of your partnership interest,
Code L4(b). Listed foreign
your basis in the marketable securities is
categories of income.
Code N3. Unrelated business taxable
•
equal to the adjusted basis of your
Code L4(c). General limitation
income. The partnership will give you
partnership interest reduced by any cash
foreign source income.
any information you need to figure
distributed in the same transaction and
unrelated business taxable income under
Code L5. Interest expense allocated
increased by any gain recognized on the
section 512(a)(1) (but excluding any
and apportioned at the partner level.
distribution of the securities.
modifications required by paragraphs (8)
Include this amount on line 4b of the
through (15) of section 512(b)) for a
applicable Forms 1116. Do not include
If, within 5 years of a distribution to you
partner that is a tax-exempt organization.
any interest expense allocated and
of marketable securities, you contributed
apportioned to U.S. source income.
Reminder. A partner is required to notify
appreciated property (other than those
the partnership of its tax-exempt status.
securities) to the partnership and the fair
Code L6. Other expenses allocated
and apportioned at the partner level.
market value of those securities
Code N4. Health insurance. Any
exceeded the adjusted basis of your
Include this amount on line 2 of the
amounts paid during the tax year for
partnership interest immediately before
applicable Forms 1116. Do not include
insurance that constitutes medical care
any expenses allocated and apportioned
the distribution (reduced by any cash
for you, your spouse, and your
received in the distribution), you may
to U.S. source income on any line of Part
dependents. On line 31 of your 2004
have to recognize gain on the appreciated
I of Form 1116.
Form 1040, you may be allowed to deduct
property. For property contributed after
such amounts, even if you do not itemize
Codes L7(a) Through Codes L7(c).
June 8, 1997, the 5-year period is
deductions. If you do itemize deductions,
Deductions allocated and apportioned
generally extended to 7 years. See
enter on line 1 of Schedule A (Form 1040)
at partnership level to foreign source
section 737 for details.
income. The following codes report the
any amounts not deducted on line 31 of
Form 1040.
expenses allocated and apportioned by
Code N6. Distributions of property
the partnership to foreign source
other than money. Box 9, Code N6,
Code N5. Distributions of money (cash
categories of income. Include these
shows the partnership’s adjusted basis of
and marketable securities). Box 9,
amounts on line 2 of the applicable Forms
property other than money immediately
Code N5, shows the distributions the
1116 (that is, the Forms 1116 for each
before the property was distributed to
partnership made to you of cash and
category of income provided to you).
you. In addition, the partnership will
certain marketable securities. The
•
Code L7(a). Deductions allocated
attach a statement showing the cost basis
marketable securities are included at their
and apportioned at partnership level to
and fair market value of each property
fair market value on the date of
passive foreign source income.
distributed. Decrease the adjusted basis
distribution (minus your share of the
•
Code L7(b). Deductions allocated
of your interest in the partnership by the
partnership’s gain on the securities
and apportioned at partnership level to
amount of your basis in the distributed
distributed to you). If the amount shown
listed foreign categories of income.
property. Your basis in the distributed
here exceeds the adjusted basis of your
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Code L7(c). Deductions allocated
property (other than in liquidation of your
partnership interest immediately before
and apportioned at partnership level to
interest) is the smaller of:
the distribution, the excess is treated as
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general limitation foreign source
The partnership’s adjusted basis
gain from the sale or exchange of your
income.
immediately before the distribution or
partnership interest. Generally, this gain
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The adjusted basis of your partnership
Code L8(a). Total foreign taxes paid.
is treated as gain from the sale of a
interest reduced by any cash distributed
Include this amount in Part II of Form
capital asset and should be reported on
1116.
in the same transaction.
the Schedule D for your return. However,
the gain may be ordinary income. For
Code L8(b). Total foreign taxes
If you received the property in
details, see Pub. 541.
accrued. Include this amount in Part II of
liquidation of your interest, your basis in
Form 1116.
The partnership will separately identify
the distributed property is equal to the
Code L9. Reduction in taxes available
both of the following.
adjusted basis of your partnership interest
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for credit. Enter this amount on line 12
The fair market value of the marketable
reduced by any cash distributed in the
of Form 1116.
securities when distributed (minus your
same transaction.
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