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Report unrecaptured section 1250 gain

4684, Casualties and Thefts, line 34,

by the amount of intangible drilling costs,

from the sale or exchange of an interest in a

columns (b)(i), (b)(ii), and (c).

development costs, or mine exploration

partnership on line 10.

costs for the property that you capitalized

If there was a gain (loss) from a casualty

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Report unrecaptured section 1250 gain

(that is, costs that you did not elect to

or theft to property not used in a trade or

from an estate, trust, regulated investment

deduct under section 59(e)). Report a loss in

business or for income-producing purposes,

company (RIC), or real estate investment

Part I of Form 4797. Report a gain in Part III

the partnership will provide you with the

trust (REIT) on line 11.

of Form 4797 in accordance with the

information you need to complete Form

instructions for line 28. See Regulations

If the partnership reports only

4684.

section 1.1254-5 for more information.

unrecaptured section 1250 gain from the

Code C. Section 1256 contracts &

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Any income, gain, or loss to the

sale or exchange of its business assets, it

straddles. The partnership will report any

partnership under section 751(b). Report

will enter a dollar amount in box 9c. If it

net gain or loss from section 1256 contracts.

this amount on Form 4797, line 10.

reports the other two types of unrecaptured

Report this amount on line 1 of Form 6781,

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Specially allocated ordinary gain (loss).

gain, it will provide an attached statement

Gains and Losses From Section 1256

Report this amount on Form 4797, line 10.

that shows the amount for each type of

Contracts and Straddles.

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Gain from the sale or exchange of

unrecaptured section 1250 gain.

Code D. Mining exploration costs

qualified small business stock (as defined in

recapture. The partnership will give you a

Box 10. Net Section 1231 Gain

the Instructions for Schedule D) that is

schedule that shows the information needed

eligible for the partial section 1202

(Loss)

to recapture certain mining exploration costs

exclusion. The partnership should also give

If this amount is from a rental activity, the

(section 617). See Pub. 535 for more

you the name of the corporation that issued

section 1231 gain (loss) is generally a

information.

the stock, your share of the partnership’s

passive activity amount. Likewise, if the

Code E. Cancellation of debt. Generally,

adjusted basis and sales price of the stock,

amount is from a trade or business activity

this amount is included in your gross income

and the dates the stock was bought and

and you did not materially participate in the

(Form 1040, line 21). Under section

sold. Corporate partners are not eligible for

activity, the section 1231 gain (loss) is a

108(b)(5), you may elect to apply any

the section 1202 exclusion. The following

passive activity amount.

portion of this cancellation of debt to the

additional limitations apply at the partner

However, an amount from a rental real

reduction of the basis of depreciable

level:

estate activity is not from a passive activity if

property. See Form 982 for more details.

1. You must have held an interest in the

you were a real estate professional (defined

Code F. Other income (loss). Amounts

partnership when the partnership acquired

on page 3) and you materially participated in

with code F are other items of income, gain,

the qualified small business stock and at all

the activity.

or loss not included in boxes 1 through 10 or

times thereafter until the partnership

If the amount is either (a) a loss that is

reported in box 11 using codes A through E.

disposed of the qualified small business

not from a passive activity or (b) a gain,

The partnership should give you a

stock.

report it on line 2, column (g), of Form 4797,

description and the amount of your share for

2. Your distributive share of the eligible

Sales of Business Property. Do not

each of these items.

section 1202 gain cannot exceed the

complete columns (b) through (f) on line 2.

amount that would have been allocated to

Report loss items that are passive

Instead, write “From Schedule K-1 (Form

you based on your interest in the

activity amounts to you following the

1065)” across these columns.

partnership at the time the stock was

Instructions for Form 8582. However, if the

If the amount is a loss from a passive

acquired.

box in item D is checked, report the loss

activity, see Passive loss limitations in the

See the Instructions for Schedule D

following the rules for Publicly traded

Instructions for Form 4797. You will need to

(Form 1040) for details on how to report the

partnerships on page 4.

report the loss following the Instructions for

gain and the amount of the allowable

Code F items may include the following:

Form 8582 to figure how much of the loss is

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exclusion.

Partnership gains from the disposition of

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allowed on Form 4797. However, if the box

Gain eligible for section 1045 rollover

farm recapture property (see the instructions

in item D is checked, report the loss

(replacement stock purchased by the

for line 27 of Form 4797) and other items to

following the rules for Publicly traded

partnership). The partnership should also

which section 1252 applies.

partnerships on page 4. If the partnership

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give you the name of the corporation that

Income from recoveries of tax benefit

had net section 1231 gain (loss) from more

issued the stock, your share of the

items. A tax benefit item is an amount you

than one activity, it will attach a statement

partnership’s adjusted basis and sales price

deducted in a prior tax year that reduced

that will identify the amount of section 1231

of the stock, and the dates the stock was

your income tax. Report this amount on line

gain (loss) from each activity.

bought and sold. Corporate partners are not

21 of Form 1040 to the extent it reduced

eligible for the section 1045 rollover. To

your tax.

Box 11. Other Income (Loss)

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qualify for the section 1045 rollover:

Gambling gains and losses.

Code A. Other portfolio income (loss).

1. You must have held an interest in the

1. If the partnership was not engaged in

The partnership will report portfolio income

partnership during the entire period in which

the trade or business of gambling, (a) report

other than interest, ordinary dividend,

the partnership held the qualified small

gambling winnings on Form 1040, line 21

royalty, and capital gain (loss) income. It will

business stock (more than 6 months prior to

and (b) deduct gambling losses to the extent

attach a statement to tell you what kind of

the sale) and

of winnings on Schedule A (Form 1040), line

portfolio income is reported.

2. Your distributive share of the gain

27.

eligible for the section 1045 rollover cannot

If the partnership has a residual interest

2. If the partnership was engaged in the

exceed the amount that would have been

in a real estate mortgage investment conduit

trade or business of gambling, (a) report

allocated to you based on your interest in

(REMIC), it will report on the statement your

gambling winnings on line 28 of Schedule E

the partnership at the time the stock was

share of REMIC taxable income (net loss)

and (b) deduct gambling losses (to the

acquired.

that you report on Schedule E (Form 1040),

extent of winnings) on line 28 of Schedule E,

See the Instructions for Schedule D

line 38, column (d). The statement will also

column (h).

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(Form 1040) for details on how to report the

report your share of any “excess inclusion”

Gain (loss) from the disposition of an

gain and the amount of the allowable

that you report on Schedule E, line 38,

interest in oil, gas, geothermal, or other

postponed gain.

column (c), and your share of section 212

mineral properties. The partnership will give

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expenses that you report on Schedule E,

Gain eligible for section 1045 rollover

you an attached statement that provides a

(replacement stock not purchased by the

line 38, column (e). If you itemize your

description of the property, your share of the

partnership). The partnership should also

deductions on Schedule A (Form 1040), you

amount realized from the disposition, your

give you the name of the corporation that

may also deduct these section 212

share of the partnership’s adjusted basis in

expenses as a miscellaneous deduction

issued the stock, your share of the

the property (for other than oil or gas

subject to the 2% limit on Schedule A, line

partnership’s adjusted basis and sales price

properties), and your share of the total

22.

of the stock, and the dates the stock was

intangible drilling costs, development costs,

bought and sold. Corporate partners are not

Code B. Involuntary conversions. This is

and mining exploration costs (section 59(e)

eligible for the section 1045 rollover. To

your net gain (loss) from involuntary

expenditures) passed through for the

qualify for the section 1045 rollover:

conversions due to casualty or theft. The

property. You must determine the amount of

partnership will give you a schedule that

gain or loss from the disposition by

1. You must have held an interest in the

shows the amounts to be entered on Form

increasing your share of the adjusted basis

partnership during the entire period in which

-7-

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

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2004 Page 7

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