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and must follow the rules discussed on

Income (Loss)

e. If you are a married person filing

separately, you lived apart from your

page 4 under Publicly traded

spouse all year.

Line 1. Ordinary Income (Loss)

partnerships.

f. You have no current or prior year

From Trade or Business

unallowed credits from a passive activity.

Activities

Lines 1 Through 25

g. Your modified adjusted gross

The amount reported for line 1 is your

The amounts shown on lines 1 through 25

income was not more than $100,000 (not

share of the ordinary income (loss) from

more than $50,000 if married filing

reflect your share of income, loss, credits,

the trade or business activities of the

separately and you lived apart from your

deductions, etc., from partnership

partnership. Generally, where you report

spouse all year).

business or rental activities without

this amount on Form 1040 depends on

h. Your interest in the rental real

reference to limitations on losses or

whether the amount is from an activity

estate activity was not held as a limited

adjustments that may be required of you

that is a passive activity to you. If you are

partner.

because of:

an individual partner filing your 2003

2. If you have a loss from a passive

1. The adjusted basis of your

Form 1040, find your situation below and

activity on line 2 and you do not meet all

partnership interest,

report your line 1 income (loss) as

the conditions in 1 above, report the loss

2. The amount for which you are at

instructed, after applying the basis and

following the Instructions for Form 8582 to

at-risk limitations on losses:

risk, or

figure how much of the loss you can

3. The passive activity limitations.

1. Report line 1 income (loss) from

report on Schedule E (Form 1040), Part

partnership trade or business activities in

II, column (f). However, if the box in Item

For information on these provisions,

which you materially participated on

H is checked, report the loss following the

see Limitations on Losses,

Schedule E (Form 1040), Part II, column

rules for Publicly traded partnerships

Deductions, and Credits beginning on

(h) or (j).

on page 4.

page 2.

3. If you were a real estate

2. Report line 1 income (loss) from

professional and you materially

partnership trade or business activities in

If you are an individual and the passive

participated in the activity, report line 2

which you did not materially participate,

activity rules do not apply to the amounts

income (loss) on Schedule E (Form

as follows:

shown on your Schedule K-1, take the

1040), Part II, column (h) or (j).

a. If income is reported on line 1,

amounts shown in column (b) and enter

4. If you have income from a passive

report the income on Schedule E, Part II,

them on the lines on your tax return as

activity on line 2, enter the income on

column (g). However, if the box in Item H

indicated in column (c). If the passive

Schedule E, Part II, column (g). However,

is checked, report the income following

activity rules do apply, report the amounts

if the box in Item H is checked, report the

the rules for Publicly traded

shown in column (b) as indicated in the

income following the rules for Publicly

partnerships on page 4.

line instructions.

traded partnerships on page 4.

b. If a loss is reported on line 1, follow

the Instructions for Form 8582, to figure

If you are not an individual, report the

Line 3. Net Income (Loss) From

how much of the loss can be reported on

amounts in column (b) as instructed on

Other Rental Activities

Schedule E, Part II, column (f). However,

your tax return.

The amount on line 3 is a passive activity

if the box in Item H is checked, report the

amount for all partners. Report the

loss following the rules for Publicly

The line numbers in column (c) are

income or loss as follows:

traded partnerships on page 4.

references to forms in use for calendar

1. If line 3 is a loss, report the loss

year 2003. If you file your tax return on a

following the Instructions for Form 8582.

Line 2. Net Income (Loss) From

calendar year basis, but your partnership

However, if the box in Item H is checked,

files a return for a fiscal year, enter the

Rental Real Estate Activities

report the loss following the rules for

amounts shown in column (b) on your tax

Generally, the income (loss) reported on

Publicly traded partnerships on page 4.

return for the year in which the

line 2 is a passive activity amount for all

2. If income is reported on line 3,

partnership’s fiscal year ends. For

partners. However, the income (loss) on

report the income on Schedule E (Form

example, if the partnership’s tax year

line 2 is not from a passive activity if you

1040), Part II, column (g). However, if the

ends in February 2004, report the

were a real estate professional (defined

box in Item H is checked, report the

amounts in column (b) on your 2004 tax

on page 3) and you materially participated

income following the rules for Publicly

return.

in the activity.

traded partnerships on page 4.

If you are filing a 2003 Form 1040, use

If you have losses, deductions, or

Lines 4a Through 4f. Portfolio

the following instructions to determine

credits from a prior year that were not

Income (Loss)

where to enter a line 2 amount:

deductible or usable because of certain

Portfolio income or loss is not subject to

limitations, such as the basis rules or the

1. If you have a loss from a passive

the passive activity limitations. Portfolio

activity on line 2 and you meet all of the

at-risk limitations, take them into account

income includes income not derived in the

following conditions, enter the loss on

in determining your net income, loss, or

ordinary course of a trade or business

Schedule E (Form 1040), Part II, column

credits for this year. However, except for

from interest, ordinary dividends,

(f).

passive activity losses and credits, do not

annuities, or royalties and gain or loss on

combine the prior-year amounts with any

a. You actively participated in the

the sale of property that produces such

amounts shown on this Schedule K-1 to

partnership rental real estate activities.

income or is held for investment.

See Special allowance for a rental real

get a net figure to report on any

estate activity on page 4.

Column (c) of Schedule K-1 tells

supporting schedules, statements, or

individual partners where to report this

forms attached to your return. Instead,

b. Rental real estate activities with

income on Form 1040.

report the amounts on the attached

active participation were your only

passive activities.

schedule, statement, or form on a

Qualified dividends. Report any

qualified dividends on line 9b of Form

year-by-year basis.

c. You have no prior year unallowed

1040.

losses from these activities.

If you have amounts other than

d. Your total loss from the rental real

Note: Qualified dividends are excluded

those shown on Schedule K-1 to

estate activities was not more than

from investment income, but you may

report on Schedule E (Form

$25,000 (not more than $12,500 if

elect to include part or all of these

CAUTION

1040), enter each item on a separate line

married filing separately and you lived

amounts in investment income. See the

of Part II of Schedule E.

apart from your spouse all year).

instructions for line 4g of Form 4952,

-6-

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

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Credits, Deductions, Etc. (For Partner'S Use Only) - 2003 Page 6

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