Partnership distributed capital gains invested in Opportunity Fund.

[Jean]

My client received distributed Capital Gains from a partnership.  He took that gain and invested it into this UOF.  How do I show this on the tax return.  The K-1 from the partnership will show the distribution, but I don't know how to put it on the return.

[mdavolio]

Hi Jean,

Here is an excerpt from the Form 8949 instructions:

How To Report an Election To Defer Tax on Eligible Gain Invested in a QO Fund If you elect to defer tax on an eligible gain by investing in a QO Fund, report the eligible gain on the form and in the manner otherwise instructed. For example, individual taxpayers would report gain from the sale of stock on Form 8949 and Schedule D (Form 1040). If the gain is reported on Form 8949, do not make any adjustments for the deferral in column (g). Report the deferral of the eligible gain on its own row of Form 8949 in Part I with box C checked or Part II with box F checked (depending on whether the gain being deferred is short-term or long-term). If you made multiple investments in different QO Funds or in the same QO Fund on different dates, use a separate row for each investment. If you invested eligible gains of the same character (but from different transactions) on the same date into the same QO Fund, you can group those investments on the same row. In column (a), enter only the EIN of the QO Fund into which you invested. In column (b), enter the date you invested in the QO Fund. Leave columns (c), (d), and (e) blank. Enter code “Z” in column (f) and the amount of the deferred gain as a negative number (in parentheses) in column (g).

Thank you,

Mike D'Avolio

Intuit

[Jean]

My question is that my client received a distribution from a Partnership.  He took that distribution and invested it in the QOF.  How do I enter the information on Schedule D?  It is not a stock transaction.

[mdavolio]

Hi Jean,

Where on the 1065 or Schedule K-1 is the captial gain / distribution reported to the partner?