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live apart from your spouse at all times

Any overall loss from a PTP.

Specific Instructions

during the year.

Any taxable social security or equivalent

railroad retirement benefits.

Only individuals, qualifying estates, and

Part I. Information About

Any deductible contributions to an IRA or

qualifying revocable trusts that made a

certain other qualified retirement plans under

section 645 election can actively participate

the Partnership

section 219.

in a rental real estate activity. Estates (other

The domestic production activities

than qualifying estates), trusts (other than

Item D

deduction.

qualifying revocable trusts that made a

The student loan interest deduction.

If the box in item D is checked, you are a

section 645 election), and corporations

partner in a PTP and must follow the rules

The tuition and fees deduction.

cannot actively participate. Limited partners

discussed earlier under Publicly traded

The deductible part of self-employment

cannot actively participate unless future

taxes.

partnerships.

regulations provide an exception.

The exclusion from income of interest

You are not considered to actively

from Series EE or I U.S. Savings Bonds used

Part II. Information About

participate in a rental real estate activity if, at

to pay higher education expenses.

any time during the tax year, your interest

the Partner

The exclusion of amounts received under

(including your spouse's interest) in the

an employer's adoption assistance program.

activity was less than 10% (by value) of all

Item E

interests in the activity.

Commercial revitalization deduction.

For your protection, this form may show only

The special $25,000 allowance for the

Active participation is a less stringent

the last four digits of your social security

commercial revitalization deduction from

requirement than material participation. You

number (SSN), individual taxpayer

rental real estate activities isn't subject to the

may be treated as actively participating if you

identification number (ITIN), or employer

active participation rules or modified

participated, for example, in making

identification number (EIN). However, the

adjusted gross income limits discussed

management decisions or arranging for

partnership has reported your complete

earlier. See the instructions for box 13, code

others to provide services (such as repairs)

identification number to the IRS.

Q, for more information.

in a significant and bona fide sense.

Item J

Management decisions that can count as

Special rules for certain other activities.

active participation include approving new

If you have net income (loss), deductions, or

Generally, the amounts reported in item J are

tenants, deciding rental terms, approving

credits from any activity to which special

based on the partnership agreement. If your

capital or repair expenditures, and other

rules apply, the partnership will identify the

interest commenced after the beginning of

similar decisions.

activity and all amounts relating to it on

the partnership's tax year, the partnership

Schedule K-1 or on an attached statement.

An estate is a qualifying estate if the

will have entered, in the Beginning column,

decedent would have satisfied the active

If you have net income subject to

the percentages that existed for you

participation requirement for the activity for

recharacterization under Temporary

immediately after admission. If your interest

the tax year the decedent died. A qualifying

Regulations section 1.469-2T(f) and

terminated before the end of the

estate is treated as actively participating for

Regulations section 1.469-2(f), report such

partnership's tax year, the partnership will

tax years ending less than 2 years after the

amounts according to the Instructions for

have entered, in the Ending column, the

date of the decedent's death.

Form 8582 (or Form 8810).

percentages that existed immediately before

termination.

If you have net income (loss), deductions,

Modified adjusted gross income

or credits from any of the following activities,

The ending percentage share shown on

limitation. The maximum special

treat such amounts as nonpassive and report

the Capital line is the portion of the capital

allowance that single individuals and married

them as indicated in these instructions.

you would receive if the partnership was

individuals filing a joint return can qualify for

liquidated at the end of its tax year by the

is $25,000. The maximum is $12,500 for

1. Working interests in oil and gas wells

distribution of undivided interests in the

married individuals who file separate returns

if you are a general partner.

partnership's assets and liabilities. If your

and who lived apart at all times during the

2. The rental of a dwelling unit any

capital account is negative or zero, the

year. The maximum special allowance for

partner used for personal purposes during

partnership will have entered zero on this

which an estate can qualify is $25,000

the year for more than the greater of 14 days

line.

reduced by the special allowance for which

or 10% of the number of days that the

the surviving spouse qualifies.

Item K

residence was rented at fair rental value.

If your modified adjusted gross income

3. Trading personal property for the

Item K should show your share of the

(defined below) is $100,000 or less ($50,000

account of owners of interests in the activity.

partnership's nonrecourse liabilities,

or less if married filing separately), your loss

partnership-level qualified nonrecourse

is deductible up to the maximum special

Self-charged interest. The partnership will

financing, and other recourse liabilities as of

allowance referred to in the preceding

report any “self-charged” interest income or

the end of the partnership's tax year. If you

paragraph. If your modified adjusted gross

expense that resulted from loans between

terminated your interest in the partnership

income is more than $100,000 (more than

you and the partnership (or between the

during the tax year, item K should show the

$50,000 if married filing separately), the

partnership and another partnership or S

share that existed immediately before the

special allowance is limited to 50% of the

corporation if both entities have the same

total disposition. A partner's “recourse

difference between $150,000 ($75,000 if

owners with the same proportional

liability” is any partnership liability for which a

married filing separately) and your modified

ownership interest in each entity). If there

partner is personally liable.

adjusted gross income. When modified

was more than one activity, the partnership

Use the total of the three amounts for

adjusted gross income is $150,000 or more

will provide a statement allocating the

figuring the adjusted basis of your

($75,000 or more if married filing separately),

interest income or expense with respect to

partnership interest.

there is no special allowance.

each activity. The self-charged interest rules

Generally, you may use only the amounts

Modified adjusted gross income is your

do not apply to your partnership interest if the

shown next to “Qualified nonrecourse

adjusted gross income figured without taking

partnership made an election under

financing” and “Recourse” to figure your

into account the following amounts, if

Regulations section 1.469-7(g) to avoid the

amount at risk. Do not include any amounts

applicable.

application of these rules. See the

that are not at risk if such amounts are

Any passive activity loss.

Instructions for Form 8582 for details.

included in either of these categories.

Any rental real estate loss allowed under

section 469(c)(7) to real estate professionals

If your partnership is engaged in two or

(defined earlier).

more different types of activities subject to

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

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Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. - 2017 Page 5

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