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) - 2014 Page 2
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13Temporary Regulations section
Note. Disqualified persons must report
partnership interest by adding items that
1.6031(c)-1T, or who furnishes incorrect
items of income, gain, loss, deduction,
increase your basis and then subtracting
information, is subject to a $100 penalty
and credit attributable to partnership oil
items that decrease your basis.
for each failure. The maximum penalty is
and gas properties as if the special rules
Use the Worksheet for Adjusting the
$1,500,000 for all such failures during a
for ELPs did not apply.
Basis of a Partner's Interest in the
calendar year. If the nominee intentionally
Nonrecourse Loans
Partnership, later, to figure the basis of
disregards the requirement to report
your interest in the partnership.
Nonrecourse loans are those liabilities of
correct information, each $100 penalty
the partnership for which no partner or
increases to $250 or, if greater, 10% of the
Note. Additional basis adjustments may
related person bears the economic risk of
aggregate amount of items required to be
apply to partners claiming deductions for
loss.
reported, and the $1,500,000 maximum
depletion. See Pub. 535 for details.
does not apply.
Elections
At-Risk Limitations
International Boycotts
Generally, the partnership decides how to
Generally, if you have (a) a loss or other
figure taxable income from its operations.
Every partnership that had operations in,
deduction from any activity carried on as a
However, two elections are made by you
or related to, a boycotting country,
trade or business or for the production of
separately on your income tax return and
company, or a national of a boycotting
income by the partnership and (b)
not by the partnership. These elections
country must file Form 5713, International
amounts in the activity for which you are
are made under the following Code
Boycott Report.
not at risk, you will have to complete Form
sections.
6198, At-Risk Limitations, to figure your
If the partnership cooperated with an
Section 108(b)(5) (election related to
allowable loss.
international boycott, it must provide you
reduction of tax attributes due to exclusion
The at-risk rules generally limit the
with a copy of its Form 5713. As a general
from gross income of discharge of
amount of loss and other deductions that
or limited partner, you must file your own
indebtedness).
you can claim to the amount you could
Form 5713 to report the partnership's
Section 901 (foreign tax credit).
actually lose in the activity. However, if
activities and any other boycott operations
you acquired your partnership interest
Additional Information
that you may have. You may lose certain
before 1987, the at-risk rules do not apply
tax benefits if the partnership participated
For more information on the treatment of
to losses from an activity of holding real
in, or cooperated with, an international
partnership income, deductions, credits,
property placed in service before 1987 by
boycott. See Form 5713 and its
etc., see the following.
the partnership. The activity of holding
instructions for more information.
Pub. 541, Partnerships.
mineral property does not qualify for this
Pub. 535, Business Expenses.
Definitions
exception. The partnership should identify
Pub. 925, Passive Activity and At-Risk
on an attached statement to Schedule K-1
General Partner
Rules.
the amount of any losses that are not
subject to the at-risk limitations.
A general partner is a partner who is
To get forms and publications, see the
personally liable for partnership debts.
instructions for your tax return or visit the
Generally, you are not at risk for
IRS website at IRS.gov.
amounts such as the following.
Limited Partner
Nonrecourse loans used to finance the
Limitations on Losses,
A limited partner is a partner in a
activity, to acquire property used in the
partnership formed under a state limited
Deductions, and Credits
activity, or to acquire your interest in the
partnership law, whose personal liability
activity, that are not secured by your own
There are three separate potential
for partnership debts is limited to the
property (other than the property used in
limitations on the amount of partnership
amount of money or other property that
the activity). See the instructions for
losses that you can deduct on your return.
the partner contributed or is required to
Partner's Share of
Liabilities, later, for the
These limitations and the order in which
contribute to the partnership. Some
exception for qualified nonrecourse
you must apply them are as follows: the
members of other entities, such as
financing secured by real property.
basis rules, the at-risk limitations, and the
domestic or foreign business trusts or
Cash, property, or borrowed amounts
passive activity limitations. Each of these
limited liability companies that are
used in the activity (or contributed to the
limitations is discussed separately below.
classified as partnerships, may be treated
activity, or used to acquire your interest in
as limited partners for certain purposes.
Basis Rules
the activity) that are protected against loss
Disqualified Person
by a guarantee, stop-loss agreement, or
Generally, you cannot claim your share of
other similar arrangement (excluding
a partnership loss (including a capital loss)
If you are a partner in a partnership
casualty insurance and insurance against
to the extent that it is greater than the
holding oil and gas properties, you are a
tort liability).
adjusted basis of your partnership interest
disqualified person if:
Amounts borrowed for use in the activity
at the end of the partnership's tax year.
from a person who has an interest in the
Any losses and deductions not allowed
You are an oil or natural gas retailer
activity, other than as a creditor, or who is
this year because of the basis limit can be
described in section 613A(d)(2) or crude
related, under section 465(b)(3), to a
carried forward indefinitely and deducted
oil refiner described in section 613A(d)(4),
person (other than you) having such an
in a later year subject to the basis limit for
or
interest.
that year.
Your average daily production of
domestic crude oil and natural gas
You should get a separate statement of
The partnership is not responsible for
exceeds 500 barrels for your tax year in
income, expenses, etc., for each activity
keeping the information needed to figure
which the partnership's tax year ends. See
from the partnership.
the basis of your partnership interest. You
section 776(b) for more details.
can figure the adjusted basis of your
Instructions for Schedule K-1 (1065-B)
-2-
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