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2. Your distributive share of the gain

passive activity loss for the year. Do not

amounts, even if you do not itemize

eligible for the section 1045 rollover

enter them on Form 8582.

deductions. If you do itemize deductions,

cannot exceed the amount that would

enter on line 1 of Schedule A (Form 1040)

Line 9. Section 179 Expense

have been allocated to you based on your

any amounts not deducted on line 29 of

Deduction

interest in the partnership at the time the

Form 1040.

•

stock was acquired.

Payments made on your behalf to an

Use this amount, along with the total cost

See the Instructions for Schedule D

IRA, qualified plan, simplified employee

of section 179 property placed in service

(Form 1040) for details on how to report

during the year from other sources, to

pension (SEP), or a SIMPLE IRA plan.

the gain and the amount of the allowable

complete Part I of Form 4562,

See Form 1040 instructions for line 24 to

postponed gain.

Depreciation and Amortization. Use Part I

figure your IRA deduction. Enter

•

Gain eligible for section 1045 rollover

of Form 4562 to figure your allowable

payments made to a qualified plan, SEP,

(replacement stock not purchased by the

section 179 expense deduction from all

or SIMPLE IRA plan on Form 1040, line

partnership). The partnership should also

sources. Report the amount on line 12 of

30. If the payments to a qualified plan

give you the name of the corporation that

Form 4562 allocable to a passive activity

were to a defined benefit plan, the

issued the stock, your share of the

from the partnership using the

partnership should give you a statement

partnership’s adjusted basis and sales

Instructions for Form 8582. However, if

showing the amount of the benefit

price of the stock, and the dates the stock

the box in Item H is checked, report this

accrued for the current tax year.

was bought and sold. Corporate partners

amount following the rules for Publicly

•

Interest expense allocated to

are not eligible for the section 1045

traded partnerships on page 4. If the

debt-financed distributions. The manner

rollover. To qualify for the section 1045

amount is not a passive activity

in which you report such interest expense

rollover:

deduction, report it on Schedule E (Form

depends on your use of the distributed

1. You must have held an interest in

1040), Part II, column (i).

debt proceeds. See Notice 89-35, 1989-1

the partnership during the entire period in

C.B. 675, for details.

Line 10. Deductions Related to

which the partnership held the qualified

•

Interest paid or accrued on debt

small business stock (more than 6

Portfolio Income

properly allocable to your share of a

months prior to the sale),

Amounts entered on this line are

working interest in any oil or gas property

2. Your distributive share of the gain

deductions that are clearly and directly

(if your liability is not limited). If you did

eligible for the section 1045 rollover

allocable to portfolio income (other than

not materially participate in the oil or gas

cannot exceed the amount that would

investment interest expense and section

have been allocated to you based on your

activity, this interest is investment interest

212 expenses from a REMIC). Generally,

interest in the partnership at the time the

reportable as described on page 9;

you should enter line 10 amounts on

stock was acquired, and

otherwise, it is trade or business interest.

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

•

3. You must purchase other qualified

Contributions to a capital construction

Instructions for Schedule A, lines 22 and

small business stock (as defined in the

fund (CCF). The deduction for a CCF

27, for more information. However, enter

Instructions for Schedule D (Form 1040))

investment is not taken on Schedule E

deductions allocable to royalties on

during the 60-day period that began on

(Form 1040). Instead, you subtract the

Schedule E (Form 1040), line 18. For the

the date the stock was sold by the

deduction from the amount that would

type of expense, write “From Schedule

partnership.

normally be entered as taxable income on

K-1 (Form 1065).”

See the Instructions for Schedule D

line 40 (Form 1040). In the margin to the

(Form 1040) for details on how to report

These deductions are not taken into

left of line 40, write ‘‘CCF’’ and the

the gain and the amount of the allowable

account in figuring your passive activity

amount of the deduction.

postponed gain.

loss for the year. Do not enter them on

The partnership should give you a

Form 8582.

description and the amount of your share

Deductions

for each of these items.

Line 11. Other Deductions

Line 8. Charitable Contributions

Amounts on this line are deductions not

Credits

included on lines 8, 9, 10, 17g, and 18b,

The partnership will give you a schedule

such as:

that shows the amount of contributions

If you have credits that are passive

•

Itemized deductions (Form 1040 filers

subject to the 50%, 30%, and 20%

activity credits to you, you must complete

enter on Schedule A (Form 1040)).

limitations. For more details, see the

Form 8582-CR (or Form 8810 for

Instructions for Schedule A (Form 1040).

corporations) in addition to the credit

Note: If there was a gain (loss) from a

forms identified below. See the

casualty or theft to property not used in a

If property other than cash is

Instructions for Form 8582-CR (or Form

trade or business or for income-producing

contributed and if the claimed deduction

8810) for more information.

purposes, the partnership will notify you.

for one item or group of similar items of

You will have to complete your own Form

property exceeds $5,000, the partnership

Also, if you are entitled to claim more

4684.

must give you a copy of Form 8283,

•

than one listed general business credit

Any penalty on early withdrawal of

Noncash Charitable Contributions, to

(investment credit, work opportunity

savings.

attach to your tax return. Do not deduct

•

credit, welfare-to-work credit, credit for

Soil and water conservation

the amount shown on this form. It is the

alcohol used as fuel, research credit,

expenditures. See section 175 for

partnership’s contribution. Instead, deduct

low-income housing credit, enhanced oil

limitations on the amount you are allowed

the amount shown on line 8 of your

recovery credit, disabled access credit,

to deduct.

Schedule K-1 (Form 1065).

•

renewable electricity production credit,

Expenditures for the removal of

If the partnership provides you with

Indian employment credit, credit for

architectural and transportation barriers to

information that the contribution was

employer social security and Medicare

the elderly and disabled that the

property other than cash and does not

taxes paid on certain employee tips,

partnership elected to treat as a current

give you a Form 8283, see the

orphan drug credit, and credit for

expense. The deductions are limited by

Instructions for Form 8283 for filing

contributions to selected community

section 190(c) to $15,000 per year from

requirements. Do not file Form 8283

development corporations), you must

all sources.

unless the total claimed deduction for all

•

complete Form 3800, General Business

Any amounts paid during the tax year

contributed items of property exceeds

Credit, in addition to the credit forms

for insurance that constitutes medical

$500.

identified below. If you have more than

care for you, your spouse, and your

one credit, see the Instructions for Form

Charitable contribution deductions are

dependents. On line 29 of Form 1040,

3800.

not taken into account in figuring your

you may be allowed to deduct such

-8-

Partner’s Instructions for Schedule K-1 (Form 1065)

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Credits, Deductions, Etc. (For Partner'S Use Only) - 2003 Page 8

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