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Subject Author Date
Cost Basis of PTP's on K-1/1065 Art 04-19-2008
Posted by Arthur Kamlet on April 21, 2008, 8:17 pm
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>Arthur Kamlet wrote:
>>> removeps-groups@yahoo.com wrote:
>>>> On Apr 19, 1:26 pm, hid...@hidden.com (Art) wrote:
>
>>
>> Your capital is what you put in after reduction by other distributions,
>> plus what you earned and retained, such as interest and dividends paid
>> to you, less losses you recognized that came to you on a K-1.
>
>I originally purchased the PTP from my broker anmd the price I paid is
>what I put in. I get a statement from the broker showing the
>distribution which is the same amount shown on line 19. So I know what I
>paid and what the distributions but I don't know how to calculate how
>much of the of the distribution is return of capital.

Until you reduce the distribution to zzero, it is all return of capital.

If it were something other than a distribution, the k-1 would
say so.


>> It is unusual for your capital account to actually go negative.
>
>If the distribution is 100% return of capital, how can you say that it
>would be unusual that capital account would go negative?


Do you have any more capital invested to be returned to you?


Pleae re-read your last question. You can reduce your invested
capital to zero, but no more.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by njoracle on April 22, 2008, 1:39 pm
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 Arthur Kamlet wrote:
>> Arthur Kamlet wrote:
>>>> removeps-groups@yahoo.com wrote:
>>>>> On Apr 19, 1:26 pm, hid...@hidden.com (Art) wrote:
>>> Your capital is what you put in after reduction by other distributions,
>>> plus what you earned and retained, such as interest and dividends paid
>>> to you, less losses you recognized that came to you on a K-1.
>> I originally purchased the PTP from my broker anmd the price I paid is
>> what I put in. I get a statement from the broker showing the
>> distribution which is the same amount shown on line 19. So I know what I
>> paid and what the distributions but I don't know how to calculate how
>> much of the of the distribution is return of capital.
>
> Until you reduce the distribution to zzero, it is all return of capital.
>
> If it were something other than a distribution, the k-1 would
> say so.
>
>
>>> It is unusual for your capital account to actually go negative.
>> If the distribution is 100% return of capital, how can you say that it
>> would be unusual that capital account would go negative?
>
>
> Do you have any more capital invested to be returned to you?
>
>
> Pleae re-read your last question. You can reduce your invested
> capital to zero, but no more.

You are correct. It can't go below zero. I set Quicken up to record all
distributions as "Return of Capital" and because the total of the
distributions is more then what I paid for the stock, Quicken shows it
as negative. However, it should be treated as zero.

That said, it appears that I will owe tax on the distributions for 2008.
The question remains: How do I report these taxable distributions on
my 1040?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Arthur Kamlet on April 22, 2008, 1:50 pm
Please log in for more thread options
>Arthur Kamlet wrote:
>>> Arthur Kamlet wrote:
>>>>> removeps-groups@yahoo.com wrote:
>>>>>> On Apr 19, 1:26 pm, hid...@hidden.com (Art) wrote:
>>>> Your capital is what you put in after reduction by other distributions,
>>>> plus what you earned and retained, such as interest and dividends paid
>>>> to you, less losses you recognized that came to you on a K-1.
>>> I originally purchased the PTP from my broker anmd the price I paid is
>>> what I put in. I get a statement from the broker showing the
>>> distribution which is the same amount shown on line 19. So I know what I
>>> paid and what the distributions but I don't know how to calculate how
>>> much of the of the distribution is return of capital.
>>
>> Until you reduce the distribution to zzero, it is all return of capital.
>>
>> If it were something other than a distribution, the k-1 would
>> say so.
>>
>>
>>>> It is unusual for your capital account to actually go negative.
>>> If the distribution is 100% return of capital, how can you say that it
>>> would be unusual that capital account would go negative?
>>
>>
>> Do you have any more capital invested to be returned to you?
>>
>>
>> Pleae re-read your last question. You can reduce your invested
>> capital to zero, but no more.
>
>You are correct. It can't go below zero. I set Quicken up to record all
>distributions as "Return of Capital" and because the total of the
>distributions is more then what I paid for the stock, Quicken shows it
>as negative. However, it should be treated as zero.
>
>That said, it appears that I will owe tax on the distributions for 2008.
> The question remains: How do I report these taxable distributions on
>my 1040?


Distributions in excess of basis are reported in the year paid
on your 1040 schedule D.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by removeps-groups@yahoo.com on April 21, 2008, 9:59 pm
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On Apr 21, 11:58 am, kam...@panix.com (Arthur Kamlet) wrote:

> Your capital is what you put in after reduction by other distributions,
> plus what you earned and retained, such as interest and dividends paid
> to you, less losses you recognized that came to you on a K-1.
>
> It is unusual for your capital account to actually go negative.

Could it be that the corporation earned dividends which were reported
on line 6a (ordinary dividends) but then re-invested those dividends.
Say the corporation paid dividends of 1k in 2004 and reinvested them.
Then the taxpayer would report 1k of dividends on Schedule B and pay
taxes on it. But then that 1k is added to the capital investment. So
say he originally bought shares of the corporation in 2002 for $500,
and line 19 over the years adds up to $700, that's OK because the
capital investment is 500+1000-700=800.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Arthur Kamlet on April 21, 2008, 10:04 pm
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>On Apr 21, 11:58 am, kam...@panix.com (Arthur Kamlet) wrote:
>
>> Your capital is what you put in after reduction by other distributions,
>> plus what you earned and retained, such as interest and dividends paid
>> to you, less losses you recognized that came to you on a K-1.
>>
>> It is unusual for your capital account to actually go negative.
>
>Could it be that the corporation earned dividends which were reported
>on line 6a (ordinary dividends) but then re-invested those dividends.
>Say the corporation paid dividends of 1k in 2004 and reinvested them.
>Then the taxpayer would report 1k of dividends on Schedule B and pay
>taxes on it. But then that 1k is added to the capital investment. So
>say he originally bought shares of the corporation in 2002 for $500,
>and line 19 over the years adds up to $700, that's OK because the
>capital investment is 500+1000-700=800.

No.

See the OP. This is a publicly traded partnership in which OP is a
limited partner.

--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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