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the at-risk provisions, or a combination of

partnership item. For example, if the

Part III. Partner's Share of

at-risk activities and any other activity, the

partnership reports a section 743(b)

Current Year Income,

partnership should give you a statement

adjustment to depreciation for property used

showing your share of nonrecourse liabilities,

in its trade or business, report the adjustment

Deductions, Credits, and

partnership-level qualified nonrecourse

on line 28 of Schedule E (Form 1040) in

Other Items

financing, and other recourse liabilities for

accordance with the instructions for box 1 of

each activity.

Schedule K-1.

The amounts shown in boxes 1 through 20

Qualified nonrecourse financing secured

reflect your share of income, loss,

If you have amounts other than

by real property used in an activity of holding

deductions, credits, etc., from partnership

those shown on Schedule K-1 to

real property that is subject to the at-risk

business or rental activities without reference

report on Schedule E (Form 1040),

CAUTION

rules is treated as an amount at risk.

to limitations on losses or adjustments that

enter each item separately on line 28 of

Qualified nonrecourse financing generally

may be required of you because of:

Schedule E (Form 1040).

includes financing for which no one is

1. The adjusted basis of your

personally liable for repayment that is

Codes. In box 11 and boxes 13 through 20,

partnership interest,

borrowed for use in an activity of holding real

the partnership will identify each item by

2. The amount for which you are at risk,

property and that is loaned or guaranteed by

entering a code in the column to the left of

a federal, state, or local government or

3. The passive activity limitations, or

the dollar amount entry space. These codes

borrowed from a “qualified” person.

are identified on page 2 of Schedule K-1 and

4. Any other limitations that must be

in these instructions.

taken into account at the partner level in

Qualified persons include any persons

figuring taxable income (for example, the

actively and regularly engaged in the

Attached statements. The partnership will

section 179 expense limitation).

business of lending money, such as a bank

enter an asterisk (*) after the code, if any, in

or savings and loan association. Qualified

the column to the left of the dollar amount

For information on these provisions, see

persons generally do not include related

entry space for each item for which it has

Limitations on Losses, Deductions, and

parties (unless the nonrecourse financing is

attached a statement providing additional

Credits, earlier.

commercially reasonable and on

information. For those informational items

substantially the same terms as loans

that cannot be reported as a single dollar

If you are an individual and the passive

involving unrelated persons), the seller of the

amount, the partnership will enter an asterisk

activity rules do not apply to the amounts

property, or a person who receives a fee for

shown on your Schedule K-1, take the

in the left column and enter “STMT” in the

the partnership's investment in the real

dollar amount entry space to indicate the

amounts shown and enter them on the lines

property.

information is provided on an attached

on your tax return as indicated in the

summarized reporting information shown on

statement.

See Pub. 925 for more information on

page 2 of the Schedule K-1. If the passive

qualified nonrecourse financing.

activity rules do apply, report the amounts

Income (Loss)

Both the partnership and you must meet

shown as indicated in these instructions.

the qualified nonrecourse rules on this debt

Box 1. Ordinary Business

If you are not an individual, report the

before you can include the amount shown

amounts in each box as instructed on your

next to “Qualified nonrecourse financing” in

Income (Loss)

tax return.

your at-risk computation.

The amount reported in box 1 is your share

See

Limitations on Losses, Deductions,

The line numbers in the summarized

of the ordinary income (loss) from trade or

and

Credits, earlier, for more information on

reporting information on page 2 of

business activities of the partnership.

the at-risk limitations.

Schedule K-1 are references to forms in use

Generally, where you report this amount on

for calendar year 2014. If you file your tax

Form 1040 depends on whether the amount

Item M

return on a calendar year basis, but your

is from an activity that is a passive activity to

If you have contributed property with a

partnership files a return for a fiscal year,

you. If you are an individual partner filing a

built-in gain or loss during the tax year, the

report the amounts on your tax return for the

2014 Form 1040, find your situation below

partnership will check the “Yes” box. Also,

year in which the partnership's fiscal year

and report your box 1 income (loss) as

the partnership will attach a statement

ends. For example, if the partnership's tax

instructed, after applying the basis and

showing the property contributed, the date of

year ends in February 2015, report the

at-risk limitations on losses. If the partnership

the contribution, and the amount of any

amounts on your 2015 tax return.

had more than one trade or business activity,

built-in gain or loss. A built-in gain or loss is

it will attach a statement identifying the

If you have losses, deductions, or credits

the difference between the fair market value

income or loss from each activity.

from a prior year that were not deductible or

of the property and your adjusted basis in the

1. Report box 1 income (loss) from

usable because of certain limitations, such

property at the time it was contributed to the

partnership trade or business activities in

as the basis rules or the at-risk limitations,

partnership. If you contributed more than 10

which you materially participated on

take them into account in determining your

properties on a single date during the tax

Schedule E (Form 1040), line 28, column (h)

net income, loss, or credits for this year.

year, the statement may instead show the

or (j).

However, except for passive activity losses

number of properties contributed on that

and credits, do not combine the prior-year

2. Report box 1 income (loss) from

date, the total amount of built-in gain, and the

amounts with any amounts shown on this

partnership trade or business activities in

total amount of built-in loss.

Schedule K-1 to get a net figure to report on

which you did not materially participate, as

The partnership is providing this for your

any supporting schedules, statements, or

follows.

information. Contributions of property with a

forms attached to your return. Instead, report

a. If income is reported in box 1, report

built-in gain or loss could affect a partner's

the amounts on the attached schedule,

the income on Schedule E (Form 1040),

tax liability (in matters concerning

statement, or form on a year-by-year basis.

line 28, column (g). However, if the box in

precontribution gain or loss, and distributions

item D is checked, report the income

subject to section 737), and may also affect

If the partnership reports a section 743(b)

following the rules for Publicly traded

how the partnership allocated certain items

adjustment to partnership items, report these

partnerships, earlier.

on your Schedule K-1. For information on

adjustments as separate items on Form

precontribution gain or loss, see the

1040 in accordance with the reporting

b. If a loss is reported in box 1, follow

instructions for box 20, Code W. For

instructions for the partnership item being

the Instructions for Form 8582 to figure how

information on distributions subject to

adjusted. A section 743(b) adjustment

much of the loss can be reported on

section 737 see the instructions for box 19,

increases or decreases your share of

Schedule E (Form 1040), line 28, column (f).

Code B.

income, deduction, gain, or loss for a

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

-6-

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2014 Page 6

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