Partership basis limitaton in a partnership

[yastrab]

I prepare a return for Partnership ABC. This partnership has two partners John and Mary who each contribute 1 million dollars. Subsequently Partnership ABC contributes $100,000 to Partnership XYZ. I am preparing the return for ABC and it recived a K1 from XYZ that has a loss of $120,000 in excess of the basis (100,000) that ABC contriibuted. There is no debt basis. How do I (should I?) limit the loss on partnership ABC because it only invested in 100,000 in XYZ.

[sjrcpa · Accepted solution]

I think you can only do this manually. Enter in Lacerte the loss allowed by basis limitations. Outside of Lacerte, keep a worksheet showing loss in excess of basis and enter it next year or whenever there is basis.

[abctax55]

That's what I do....a bit of a pain

[TaxMonkey]

I would take a moment to understand WHY they are allocated a loss in excess of their basis.  99% of the situations I have seen are the result of an error.