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If there was a gain (loss) from a casualty

Gambling gains and losses.

If you have any foreign source

or theft to property not used in a trade or

1. If the partnership wasn't engaged in

unrecaptured section 1250 gain, see

business or for income-producing purposes,

the trade or business of gambling, (a) report

the instructions for box 16, later.

the partnership will provide you with the

CAUTION

gambling winnings on Form 1040, line 21,

information you need to complete Form

Box 10. Net Section 1231 Gain

and (b) deduct gambling losses to the extent

4684.

of winnings on Schedule A (Form 1040),

(Loss)

line 28.

Code C. Section 1256 contracts and

The amount in box 10 is generally passive if

straddles. The partnership will report any

2. If the partnership was engaged in the

it is from a:

net gain or loss from section 1256 contracts.

trade or business of gambling, (a) report

Rental activity, or

Report this amount on Form 6781, Gains and

gambling winnings on line 28 of Schedule E

Trade or business activity in which you

Losses From Section 1256 Contracts and

(Form 1040), and (b) deduct gambling

didn't materially participate.

Straddles.

losses (to the extent of winnings) on line 28

of Schedule E (Form 1040), column (h).

However, an amount from a rental real

Code D. Mining exploration costs recap-

Gain (loss) from the disposition of an

estate activity isn't from a passive activity if

ture. The partnership will give you a

interest in oil, gas, geothermal, or other

you were a real estate professional (defined

statement that shows the information needed

mineral properties. The partnership will

earlier) and you materially participated in the

to recapture certain mining exploration costs

attach a statement that provides a

activity.

(section 617). See Pub. 535 for details.

description of the property, your share of the

If the amount is either (a) a loss that isn't

Code E. Cancellation of debt. Generally,

amount realized from the disposition, your

from a passive activity or (b) a gain, report it

this cancellation of debt (COD) amount is

share of the partnership's adjusted basis in

on line 2, column (g), of Form 4797, Sales of

included in your gross income (Form 1040,

the property (for other than oil or gas

Business Property. Do not complete columns

line 21). Under section 108(b)(5), you may

properties), and your share of the total

(b) through (f) on line 2 of Form 4797.

elect to apply any portion of the COD amount

intangible drilling costs, development costs,

Instead, enter “From Schedule K-1 (Form

excluded from gross income to the reduction

and mining exploration costs (section 59(e)

1065)” across these columns.

of the basis of depreciable property. See

expenditures) passed through for the

Form 982 for more details.

If the amount is a loss from a passive

property. You must figure your gain or loss

activity, see Passive Loss Limitations in the

from the disposition by increasing your share

Code F. Other income (loss). Amounts

of the adjusted basis by the intangible drilling

Instructions for Form 4797. Report the loss

with code F are other items of income, gain,

following the Instructions for Form 8582 to

costs, development costs, or mine

or loss not included in boxes 1 through 10 or

figure how much of the loss is allowed on

exploration costs for the property that you

reported in box 11 using codes A through E.

capitalized (that is, costs that you didn't elect

Form 4797. However, if the box in item D is

The partnership should give you a

checked, report the loss following the rules

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

description and the amount of your share for

for Publicly traded partnerships, earlier. If the

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

each of these items.

III of Form 4797 in accordance with the

partnership had net section 1231 gain (loss)

Report loss items that are passive activity

from more than one activity, it will attach a

instructions for line 28. See Regulations

amounts to you following the Instructions for

section 1.1254-5 for details.

statement that will identify the section 1231

Form 8582. However, if the box in item D is

gain (loss) from each activity.

Any income, gain, or loss to the

checked, report the loss following the rules

partnership under section 751(b) (certain

If you have any foreign source net

for Publicly traded partnerships, earlier.

distributions treated as sales or exchanges).

section 1231 gain (loss), see the

Report this amount on Form 4797, line 10.

Code F items may include the following.

instructions for box 16, later.

Specially allocated ordinary gain (loss).

Gain or loss attributable to the sale or

CAUTION

Report this amount on Form 4797, line 10.

exchange of qualified preferred stock of the

Box 11. Other Income (Loss)

Net short-term capital gain (loss) and net

Federal National Mortgage Association

long-term capital gain (loss) from

(Fannie Mae) and the Federal Home Loan

Code A. Other portfolio income (loss).

Schedule D (Form 1065) that isn't portfolio

Mortgage Corporation (Freddie Mac). The

The partnership will report portfolio income

income. An example is gain or loss from the

partnership will report on an attached

other than interest, ordinary dividend,

disposition of nondepreciable personal

statement the amount of gain or loss

royalty, and capital gain (loss) income, and

property used in a trade or business activity

attributable to the sale or exchange of the

attach a statement to tell you what kind of

of the partnership. Report total net short-term

qualified preferred stock, the date the stock

portfolio income is reported.

gain (loss) on Schedule D (Form 1040),

was acquired by the partnership, and the

If the partnership held a residual interest

line 5. Report the total net long-term gain

date the stock was sold or exchanged by the

in a real estate mortgage investment conduit

(loss) on Schedule D (Form 1040), line 12.

partnership. If the partner is not a financial

(REMIC), it will report on the statement your

Current year section 108(i) cancellation of

institution, report the gain or loss on line 5 or

share of REMIC taxable income (net loss)

debt (COD) income. The partnership will

line 12 of Schedule D (Form 1040) in

that you report on Schedule E (Form 1040),

provide your share of the deferred COD

accordance with the Instructions for

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

income amount that you must include in

Schedule D and Instructions for Form 8949.

report your share of any “excess inclusion”

income in the current tax year under section

If a partner is a financial institution referred to

that you report on Schedule E (Form 1040),

108(i)(1) or section 108(i)(5)(D)(i) or (ii).

in section 582(c)(2) or a depositary institution

line 38, column (c), and your share of section

Gain from the sale or exchange of

holding company (as defined in section 3(w)

212 expenses that you report on Schedule E

qualified small business (QSB) stock (as

(1) of the Federal Deposit Insurance Act),

(Form 1040), line 38, column (e). If you

defined in the Instructions for Schedule D

report the gain or loss in accordance with the

itemize your deductions on Schedule A

(Form 1065)) that is eligible for a section

Instructions for Form 4797, and Rev. Proc.

(Form 1040), you may also deduct these

1202 exclusion. The partnership should also

2008-64, 2008-47 I.R.B. 1195.

section 212 expenses as a miscellaneous

give you (a) the name of the corporation that

Partnership gains from the disposition of

deduction subject to the 2% limit on

issued the QSB stock, (b) your share of the

farm recapture property (see the instructions

Schedule A (Form 1040), line 23.

partnership's adjusted basis and sales price

for line 27 of Form 4797) and other items to

of the QSB stock, and (c) the dates the QSB

Code B. Involuntary conversions. This is

which section 1252 applies.

stock was bought and sold. Corporate

your net gain (loss) from involuntary

Income from recoveries of tax benefit

partners are not eligible for the section 1202

items. A tax benefit item is an amount you

conversions due to casualty or theft. The

exclusion. The following additional limitations

partnership will give you a statement that

deducted in a prior tax year that reduced

apply at the partner level.

your income tax. Report this amount on

shows the amounts to be reported on Form

line 21 of Form 1040 to the extent it reduced

4684, Casualties and Thefts, line 34,

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

your tax in the prior tax year.

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

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Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2016 Page 8

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