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Taxpayer took distributions in excess of his basis from his partnership. When I enter the distributions in section L of the K-1 (capital account) it shows an ending capital account balance as a negative amount. Is this correct, or should it show as $0? Should I enter the excess distributions on line 9a to carry to the 1040 schedule D? Should any additional information be reported on any other K-1 line?
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Capital accounts are not basis, and can be negative. Distributions are shown, in box 19 and definately NOT in 9a
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The more I know the more I don’t know.
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Can you tell me how in ProSeries, I would get the software to show a capital gain when a Partner K-1 shows a distribution in Block 19, that is in excess of their capital account (Block L Ending capital account goes negative)?
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You can't... It's not part of the partnership return.
The excess & the 'gain' is computed AT the shareholder level - on the F 1040. A partner's basis may/or may not be the same as the capital account shown on the K-1. Outside basis can/often does exist.
edit... and that gain (if there is one... depends...) is reported via the dispositions screen (F 8949/Sch D). As I use Lacerte, I can't help with the PS specifics.
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I realize my question wasn't specific enough. On Form 1040, in Pro Series, if there there really is a distribution in excess of the capital account (and there is no outside basis) how do I make the capital gain show on the Form 1040?
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I believe you would need to enter on Schedule D via 1099 B Worksheet - Quick Entry Table