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b. If a loss is reported in box 1, follow

report the income following the rules for

Investment Interest Expense Deduction, for

the Instructions for Form 8582 to figure how

Publicly traded partnerships, earlier.

important information on making this

much of the loss can be reported on

election.

Box 3. Other Net Rental Income

Schedule E (Form 1040), line 28, column (f).

(Loss)

However, if the box in item D is checked,

If you have any foreign source

report the loss following the rules for Publicly

The amount in box 3 is a passive activity

qualified dividends, see the

traded partnerships, earlier.

instructions for box 16, later.

amount for all partners. If the partnership had

CAUTION

more than one rental activity, it will attach a

Box 2. Net Rental Real Estate

In the case of a corporate partner,

statement identifying the income or loss from

Income (Loss)

the partnership will attach a

each activity. Report the income or loss as

TIP

statement to the Schedule K-1

Generally, the income (loss) reported in

follows.

explaining what part of the dividends

box 2 is a passive activity amount for all

1. If box 3 is a loss, follow the

included in boxes 6a and 6b is eligible for the

partners. However, the income (loss) in

Instructions for Form 8582 to figure how

“dividends received by corporations

box 2 isn't from a passive activity if you were

much of the loss can be reported on

deduction” under section 243(a), (b), or (c).

a real estate professional (defined earlier)

Schedule E (Form 1040), line 28, column (f).

and you materially participated in the activity.

However, if the box in item D is checked,

Box 7. Royalties

If the partnership had more than one rental

report the loss following the rules for Publicly

real estate activity, it will attach a statement

traded partnerships, earlier.

Report royalties on Schedule E (Form 1040),

identifying the income or loss from each

line 4.

2. If income is reported in box 3, report

activity.

the income on Schedule E (Form 1040),

Box 8. Net Short-Term Capital

If you are filing a 2016 Form 1040, use

line 28, column (g). However, if the box in

Gain (Loss)

the following instructions to determine where

item D is checked, report the income

to report a box 2 amount.

following the rules for Publicly traded

Report the net short-term capital gain (loss)

partnerships, earlier.

on Schedule D (Form 1040), line 5.

1. If you have a loss from a passive

activity in box 2 and you meet all the

Box 9a. Net Long-Term Capital

Box 4. Guaranteed Payments

following conditions, report the loss on

Gain (Loss)

Schedule E (Form 1040), line 28, column (f).

Generally, amounts on this line are not

passive income, and you should report them

Report the net long-term capital gain (loss)

a. You actively participated in the

on Schedule E (Form 1040), line 28, column

on Schedule D (Form 1040), line 12.

partnership rental real estate activities. See

(j) (for example, guaranteed payments for

Special allowance for a rental real estate

If you have any foreign source net

personal services).

activity, earlier.

long-term capital gain (loss), see the

b. Rental real estate activities with

Portfolio Income

instructions for box 16, later.

CAUTION

active participation were your only passive

Portfolio income or loss (shown in boxes 5

Box 9b. Collectibles (28%) Gain

activities.

through 9b and in box 11, code A) isn't

(Loss)

c. You have no prior year unallowed

subject to the passive activity limitations.

losses from these activities.

Portfolio income includes income (not

Report collectibles gain or loss on line 4 of

d. Your total loss from the rental real

derived in the ordinary course of a trade or

the 28% Rate Gain Worksheet—Line 18 in

estate activities wasn't more than $25,000

business) from interest, ordinary dividends,

the Instructions for Schedule D (Form 1040).

(not more than $12,500 if married filing

annuities or royalties, and gain or loss on the

If you have any foreign source

separately and you lived apart from your

sale of property that produces such income

collectibles (28%) gain (loss), see

spouse all year).

or is held for investment.

the instructions for box 16, later.

e. If you are a married person filing

CAUTION

Box 5. Interest Income

separately, you lived apart from your spouse

Box 9c. Unrecaptured Section

Report interest income on line 8a of Form

all year.

1250 Gain

1040. If the amount of interest income

You have no current or prior year

included in box 5 includes interest from the

There are three types of unrecaptured

unallowed credits from a passive activity.

credit for holders of clean renewable energy

section 1250 gain. Report your share of this

g. Your modified adjusted gross income

bonds, the partnership will attach a

unrecaptured gain on the Unrecaptured

wasn't more than $100,000 (not more than

statement to Schedule K-1 showing your

Section 1250 Gain Worksheet—Line 19 in

$50,000 if married filing separately and you

share of interest income from these credits.

the Instructions for Schedule D (Form 1040)

lived apart from your spouse all year).

Because the basis of your interest in the

as follows.

partnership has been increased by your

h. Your interest in the rental real estate

Report unrecaptured section 1250 gain

share of the interest income from these

activity wasn't held as a limited partner.

from the sale or exchange of the

credits, you must reduce your basis by the

2. If you have a loss from a passive

partnership's business assets on line 5.

same amount. See line 4 of the

Worksheet

Report unrecaptured section 1250 gain

activity in box 2 and you do not meet all the

for Adjusting the Basis of a Partner's Interest

from the sale or exchange of an interest in a

conditions in (1) above, follow the

in the

Partnership.

Instructions for Form 8582 to figure how

partnership on line 10.

Report unrecaptured section 1250 gain

much of the loss you can report on

Box 6a. Ordinary Dividends

from an estate, trust, regulated investment

Schedule E (Form 1040), line 28, column (f).

Report ordinary dividends on line 9a of Form

company (RIC), or real estate investment

However, if the box in item D is checked,

1040.

trust (REIT) on line 11.

report the loss following the rules for Publicly

traded partnerships, earlier.

Box 6b. Qualified Dividends

If the partnership reports only

3. If you were a real estate professional

unrecaptured section 1250 gain from the

Report any qualified dividends on line 9b of

and you materially participated in the activity,

sale or exchange of its business assets, it

Form 1040.

report box 2 income (loss) on Schedule E

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

Qualified dividends are excluded

(Form 1040), line 28, column (h) or (j).

reports the other two types of unrecaptured

from investment income, but you

TIP

4. If you have income from a passive

gain, it will provide an attached statement

may elect to include part or all of

that shows the amount for each type of

activity in box 2, report the income on

these amounts in investment income. See

unrecaptured section 1250 gain.

Schedule E (Form 1040), line 28, column (g).

the instructions for line 4g of Form 4952,

However, if the box in item D is checked,

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

-7-

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2016 Page 7

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