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must follow the rules with respect to publicly trad-

how to determine the adjusted basis of your part-

2. Report line 1 income (loss) from partnership

ed partnerships. For additional information see

nership interest.

trade or business activities in which you did

the Instructions for federal Form 8582.

not materially participate, as follows:

At-Risk Rules

a. If income is reported on line 1, report the

Lines 1 - 34

Generally, if you have (1) a loss or other deduc-

income on Form N-15, line 17. However,

If you are an individual partner, take the amounts

tion from any activity carried on as a trade or

if the box in Item E is checked, report

shown in column (b) and/or column (c) and enter

business or for the production of income by the

the income following the rules for Pub-

them on the appropriate worksheet and/or lines

partnership and (2) amounts in the activity for

licly traded partnerships discussed in

of your tax return as indicated in column (d). If

which you are not at risk, you will have to com-

the federal instructions for Schedule K-1

you are not an individual partner, report the

plete federal Form 6198, At-Risk Limitations, to

(Form 1065).

amounts in column (c) as instructed on your tax

figure the allowable loss to report on your return.

b. If a loss is reported on line 1, report the

return.

The at-risk rules generally limit the amount of

loss following the instructions for federal

The line number references in column (d) are

loss (including loss on disposition of assets) and

Form 8582, to determine how much of

references to forms in use for calendar year

other deductions (such as the section 179 ex-

the loss can be reported on Form N-15,

2012. If you file your tax return on a calendar

pense deduction) that you can claim to the

line 17. However, if the box in Item E is

year basis, but your partnership files a return for

amount you could actually lose in the activity.

checked, report the loss following the

a fiscal year, you must enter the amounts shown

rules for Publicly traded partnerships

Generally, you are not at risk for amounts

in column (b) and/or column (c) on your tax return

discussed in the federal instructions for

such as the following:

for the year in which the partnership’s fiscal year

•

Schedule K-1 (Form 1065).

Nonrecourse loans used to finance the activ-

ends.

Line 2. Income or loss from rental real estate

ity, to acquire property used in the activity, or

If you have losses and deductions etc., from a

activities.—Generally, the income (loss) report-

to acquire your interest in the activity, that are

prior year that were not deductible or usable be-

ed on line 2 is a passive activity amount for all

not secured by your own property (other than

cause of certain limitations, such as the at-risk

partners. There is an exception, however, for

that used in the activity). See Item D, on page

rules, they may be taken into account in deter-

losses from a qualified low-income housing proj-

1, for the exception for qualified nonrecourse

mining your net income, loss, etc., for this year.

ect. The loss limitations of section 469 do not

financing secured by real property.

However, do not combine the prior-year amounts

•

apply to qualified investors in qualified low-in-

Cash, property, or borrowed amounts used in

with any amounts shown on this Schedule K-1 to

come housing projects. The partnership will have

the activity (or contributed to the activity, or

get a net figure to report on any supporting

attached a schedule for line 2 to identify such

used to acquire your interest in the activity)

schedules, statements, or forms (such as federal

amounts, if applicable.

that are protected against loss by a guaran-

Schedule E, Supplemental Income and Loss) at-

Use the following instructions to determine

tee, stop-loss agreement, or other similar ar-

tached to your return. Instead, report the amounts

where to enter a line 2 amount:

rangement (excluding casualty insurance and

on the attached schedule, statement, or form on

insurance against tort liability).

1. If you have a loss (other than from a qualified

a year-by-year basis.

•

low-income housing project) on line 2 and you

Amounts borrowed for use in the activity from

If you have amounts, other than those shown

meet all of the following conditions, enter the

a person who has an interest in the activity,

on Schedule K-1, to report on federal Schedule

loss on Form N-15, line 17:

other than as a creditor, or who is related, un-

E, enter each item on a separate line of Part II of

der section 465(b)(3), to a person (other than

a. You determined that you actively partici-

Schedule E.

yourself) having such an interest.

pated in the partnership rental real estate

activities. (See Special allowance for a

Lines 1 - 3

To help you complete federal Form 6198, the

rental real estate activity discussed in

partnership should give you your share of the to-

The amounts shown on lines 1 through 3 reflect

the federal instructions for Schedule K-1

tal pre-1976 losses from a section 465(c)(1) ac-

your share of income or loss from partnership

(Form 1065).)

tivity for which there existed a corresponding

business or rental operations without reference

amount of nonrecourse liability at the end of the

b. Rental real estate activities with active

to limitations on losses or adjustments that may

year in which the losses occurred. In addition,

participation were your only passive activi-

be required of you because of (1) the adjusted

you should get a separate statement of income,

ties.

basis of your partnership interest, (2) the amount

expenses, etc., for each activity from the partner-

c. You have no prior year unallowed losses

for which you are at risk as determined under

ship.

from these activities.

section 465, or (3) the passive activity limitations

of section 469. Information on these provisions is

d. Your total loss from the rental real estate

Passive Activity Limitations

given below.

activities was not more than $25,000

See the federal instructions for Schedule K-1

(not more than $12,500 if married filing

Limitations on Losses and

(Form 1065) for a discussion on passive activity

separately and you lived apart from your

Deductions

limitations.

spouse all year).

Basis Rules

e. If you are a married person filing sepa-

Line-by-Line Instructions

Generally, you may not claim your share of a

rately, you lived apart from your spouse all

In general, for Form N-11 filers, if your federal

partnership loss (including capital loss) that is

year.

Schedule K-1 (Form 1065) and Hawaii Schedule

greater than the adjusted basis of your partner-

f. You have no current or prior year unal-

K-1 (Form N-20) are different, the necessary ad-

ship interest at the end of the partnership’s tax

lowed credits from a passive activity.

justments are to be made in the Hawaii Additions

year.

g. Your modified adjusted gross income was

Worksheet and/or Hawaii Subtractions Work-

Items which increase your basis are:

not more than $100,000 (not more than

sheet in the Form N-11 Instructions.

•

Money and your adjusted basis in property

$50,000 if married filing separately and

contributed to the partnership.

you lived apart from your spouse all year).

Income

•

Your share of the partnership’s income.

h. Your interest in the rental real estate activ-

Line 1. Ordinary income (loss) from trade or

•

ity was not held as a limited partner.

Your share of the increase in the liabilities of

business activities.—The amount reported for

the partnership (or your individual liabilities

2. If you have a loss on line 2 (other than from

line 1 is your share of the ordinary income (loss)

caused by your assumption of partnership li-

a qualified low-income housing project), and

from the trade or business activities of the part-

abilities).

you do not meet all of the conditions in 1

nership. Generally, where you report this amount

above, report the loss following the instruc-

depends on whether or not the amount is from an

Items which decrease your basis are:

•

tions for federal Form 8582 to determine how

activity that is a passive activity to you. If you are

Money and the adjusted basis of property dis-

much of the loss can be reported on Form

an individual partner filing your 2012 Form N-15,

tributed to you.

N-15, line 17. However, if the box in Item E

find your situation in the following guide and re-

•

Your share of the partnership’s losses.

is checked, report the loss following the rules

port your line 1 income (loss) as instructed, after

•

Your share of the decrease in the liabilities of

for Publicly traded partnerships discussed

applying the basis and at-risk limitations on loss-

the partnership (or your individual liabilities

in the federal instructions for Schedule K-1

es:

assumed by the partnership).

(Form 1065).

1. Report line 1 income (loss) from partnership

The above is not a complete list of items and

3. If you are a qualified investor reporting a qual-

trade or business activities in which you ma-

factors which determine basis. See federal Pub-

ified low-income housing project loss, report

terially participated on Form N-15, line 17.

lication 541 for a more complete discussion of

the loss on Form N-15, line 17.

Page 2

Partner'S Instructions For Schedule K-1 (Form N-20) - Partnership'S Income, Credits, Deductions, Etc. - 2012 Page 2

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