Partner'S Instructions For Schedule K-1 (Form 1065-B) - Partner'S Share Of Income (Loss) From An Electing Large Partnership (For Partner'S Use Only) - 2008 Page 2
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12items required to be reported, and the
Note. Additional basis adjustments may
Elections
$100,000 maximum does not apply.
apply to partners claiming deductions for
Generally, the partnership decides how to
depletion. See chapter 9 of Pub. 535 for
figure taxable income from its operations.
details.
International Boycotts
However, two elections are made by you
At-Risk Limitations
Every partnership that had operations in,
separately on your income tax return and
or related to, a boycotting country,
not by the partnership. These elections
Generally, if you have (a) a loss or other
company, or a national of a country must
are made under the following code
deduction from any activity carried on as
file Form 5713, International Boycott
sections.
a trade or business or for the production
•
Report.
Section 108(b)(5) (income from the
of income by the partnership and (b)
discharge of indebtedness).
amounts in the activity for which you are
If the partnership cooperated with an
•
Section 901 (foreign tax credit).
not at risk, you will have to complete
international boycott, it must provide you
Form 6198, At-Risk Limitations, to figure
Change of Tax Year
with a copy of its Form 5713. As a
your allowable loss.
general or limited partner, you must file
If the partnership attaches a statement to
The at-risk rules generally limit the
your own Form 5713 to report the
Schedule K-1 indicating that it has
amount of loss and other deductions that
partnership’s activities and any other
changed its tax year and that you can
you can claim to the amount you could
boycott operations that you may have.
elect to report your distributive share of
actually lose in the activity. However, if
You may lose certain tax benefits if the
the income attributable to that change
you acquired your partnership interest
partnership participated in, or cooperated
ratably over 4 tax years, see Rev. Proc.
before 1987, the at-risk rules do not apply
with, an international boycott. See Form
2003-79, 2003-45 I.R.B. 1036, for details
to losses from an activity of holding real
5713 and its instructions for more
on making the election. To make the
property placed in service before 1987 by
information.
election, you must file Form 8082, Notice
the partnership. The activity of holding
of Inconsistent Treatment or
mineral property does not qualify for this
Definitions
Administrative Adjustment Request, with
exception. The partnership should identify
your income tax return for each of the 4
on an attachment to Schedule K-1 the
General Partner
tax years. File Form 8082 for this purpose
amount of any losses that are not subject
in accordance with Rev. Proc. 2003-79
A general partner is a partner who is
to the at-risk limitations.
instead of the Form 8082 instructions.
personally liable for partnership debts.
Generally, you are not at risk for
Additional Information
amounts such as the following.
Limited Partner
•
Nonrecourse loans used to finance the
For more information on the treatment of
A limited partner is a partner in a
activity, to acquire property used in the
partnership income, deductions, credits,
partnership formed under a state limited
activity, or to acquire your interest in the
etc., see the following:
partnership law, whose personal liability
activity, that are not secured by your own
•
Pub. 541, Partnerships;
for partnership debts is limited to the
property (other than the property used in
•
Pub. 535, Business Expenses; and
amount of money or other property that
the activity). See the instructions for
•
Pub. 925, Passive Activity and At-Risk
the partner contributed or is required to
Partner’s Share of Liabilities on page 6 for
Rules.
contribute to the partnership. Some
the exception for qualified nonrecourse
members of other entities, such as
To get forms and publications, see the
financing secured by real property.
domestic or foreign business trusts or
•
instructions for your tax return.
Cash, property, or borrowed amounts
limited liability companies that are
used in the activity (or contributed to the
classified as partnerships, may be treated
Limitations on Losses,
activity, or used to acquire your interest in
as limited partners for certain purposes.
the activity) that are protected against
Deductions, and Credits
For example, see Temporary Regulations
loss by a guarantee, stop-loss agreement,
section 1.469-5T(e)(3), which treats all
There are three separate potential
or other similar arrangement (excluding
members with limited liability as limited
limitations on the amount of partnership
casualty insurance and insurance against
partners for purposes of section 469(h)(2)
losses that you can deduct on your return.
tort liability).
•
(relating to the passive activity loss
These limitations and the order in which
Amounts borrowed for use in the
limitation rules).
you must apply them are as follows: the
activity from a person who has an interest
basis rules, the at-risk limitations, and the
in the activity, other than as a creditor, or
Disqualified Person
passive activity limitations. Each of these
who is related, under section 465(b)(3), to
If you are a partner in a partnership
limitations is discussed separately below.
a person (other than you) having such an
holding oil and gas properties, you are a
interest.
Basis Rules
“disqualified person” if:
You should get a separate statement
Generally, you cannot claim your share of
•
of income, expenses, etc., for each
You are an oil or natural gas retailer
a partnership loss (including a capital
activity from the partnership.
described in section 613A(d)(2) or crude
loss) to the extent that it is greater than
oil refiner described in section 613A(d)(4)
the adjusted basis of your partnership
Passive Activity Limitations
or
interest at the end of the partnership’s tax
•
Section 469 provides rules that limit the
Your average daily production of
year. Any losses and deductions not
deduction of certain losses and credits.
domestic crude oil and natural gas
allowed this year because of the basis
These rules apply to partners who:
exceeds 500 barrels for your tax year in
limit can be carried forward indefinitely
•
Are individuals, estates, trusts, closely
which the partnership’s tax year ends.
and deducted in a later year subject to the
held corporations (other than S
See section 776(b) for more details.
basis limit for that year.
corporations), or personal service
The partnership is not responsible for
Note. Disqualified persons must report
corporations and
•
keeping the information needed to figure
items of income, gain, loss, deduction,
Have a passive activity loss or credit for
the basis of your partnership interest. You
and credit attributable to partnership oil
the tax year.
can figure the adjusted basis of your
and gas properties as if the special rules
Individuals, estates, and trusts. If you
for ELPs did not apply.
partnership interest by adding items that
have a passive activity loss or credit, use
increase your basis and then subtracting
Form 8582, Passive Activity Loss
Nonrecourse Loans
items that decrease your basis.
Limitations, to figure your allowable
Nonrecourse loans are those liabilities of
Use the worksheet on page 3 to figure
passive losses and Form 8582-CR,
the partnership for which no partner bears
the basis of your interest in the
Passive Activity Credit Limitations, to
the economic risk of loss.
partnership.
figure your allowable passive credits.
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