The information contained herein is not deemed to be tax or legal advice. Please consult with your tax and/or legal advisor for such guidance. In addition, the information herein is not an offer to sell or a solicitation of an offer to buy, which can be made only by a private placement memorandum.
- Is a Schedule K-1 required to be received by January 31 as is the case for Form 1099?
- Why do I receive a Schedule K-1 rather than a Form 1099?
- How does income reported on a Schedule K-1 differ from a Form 1099?
- Should cash distributions received from the entity as reported on line 19 of my Schedule K-1 be reported as income on my personal income tax returns?
- Are cash distributions always non-taxable?
- Why is income for a year as reported on my Schedule K-1 not equal to distributions I received in that year?
- My cash distributions were less than the amount of distributions reported on Line 19 of my Schedule K-1, why?
- How do I determine my gain or loss if I sell my investment?
- How is my adjusted tax basis determined for computing gain or loss?
- Are adjustments to my tax basis maintained by your Tax Department?
- Who do I contact about my Schedule K-1 questions?
- When are Schedule K-1s sent to investors?
- Why do some Schedule K-1s take longer than others?
- I transferred my interest last year, but I still received a Schedule K-1, why?
- Does the ending capital account balance as reflected in item L of my Schedule K-1 represent the value of my interest?
- Do I have to file tax returns in any state in which I do not live?
No. Schedule K-1 must be received no later than the due date of the partnership's tax return which is April 15, or September 15 for partnerships on filing extension. Top of Page
Partnerships (including limited liability companies taxed as partnerships) are not subject to federal or state income tax. Instead, the partnership is required to issue a Schedule K-1 to each of its investors indicating their allocated shares of each category of the partnership's income (e.g., rental, interest, dividend), deduction or credit. Investors use the information contained in the Schedule K-1 in preparing their individual federal (IRS Form 1040) and state income tax returns.Top of Page
The Schedule K-1 reports each investor's allocated share of the partnership's taxable income and other reportable items. Form 1099 is generally used by banks and brokerage firms to report dividend and interest income and gross proceeds on the sale of securities. Top of Page
No. Cash distributions reflected on line 19 of your Schedule K-1 is for informational purposes and should not be reported anywhere on your personal income tax returns.Top of Page
Cash distributions are not reported on your individual income tax returns. However, if cumulative cash distributions received from the partnership exceed your tax basis in the partnership, you would have reportable taxable gain to the extent of such excess. Distributions in excess of basis are normally not made by any of our investments.
For further information, refer to page 12 of the 2009 Partner's Instructions for Schedule K-1 (Form 1065).Top of Page
Cash distributions represent your share of distributions from the entity. Reportable income, on the other hand, represents your allocated share of the entity's income which is effected by, among other things, depreciation expense which reduces taxable income but not cash, and by mortgage principal amortization which reduces cash but not taxable income.Top of Page
Many states require partnerships that own real property in their state to make payments of estimated income taxes on behalf of its investors who are non-residents of that state. See "Do I have to file tax returns in any state in which I do not live?" The partnership recoups such payments by reducing distributions it otherwise makes to such non-resident investor. For tax purposes, it is as if the partnership distributed the full amount to you and you then re-transferred the amount paid on your behalf to the partnership.Top of Page
Gain or loss on sale is equal to the difference between consideration received on the sale and your adjusted tax basis in the interest.Top of Page
Generally, your tax basis is the original amount paid for the interest, increased by the cumulative amount of income and gain reported on your Schedules K-1, and reduced by any cumulative loss, deduction and credit reported on your Schedules K-1. Tax basis is also reduced (but not below zero) by the cumulative amount of distributions received from the partnership. Schedule K-1 Item L - Partner's Capital Account Analysis provides an approximation of ending tax basis at December 31 for an original investor. Special rules apply to investors who inherited their interest or received it as a gift.Top of Page
No. Each investor should maintain his or her own individual tax records. This is especially important for inherited interests. We can assist you with historical information, such as cumulative income and distributions previously reported.Top of Page
Our Tax Department strives to mail Schedule K-1s as soon as tax returns are delivered to us by the outside accountants for each property. Tax filings have become more and more complex and time consuming over the years, and therefore the time needed by the outside accountants has increased. See estimated Schedule K-1 Availability release dates in Tax Information section.Top of Page
For some investments we rely on reporting from other parties, and delays may arise in issuing K-1s for those investments. In other cases, additional time may be required to resolve a legal or tax complexity issue to the investors' best advantage.Top of Page
A Schedule K-1 is sent to each investor who held an interest in an entity for any period of time during the previous year. Such K-1 reflects reportable items for that period of ownership.Top of Page
Yes. Rental real estate income reported to you on our Schedule K-1s is passive income and may be applied against any passive losses you have from other investments. Special rules apply to investments you may have in publicly traded partnerships. Also, different rules apply to interest and dividend income treated as portfolio, not passive, income. As these rules are complex, we suggest you consult your tax advisor for additional information.Top of Page
No. Your capital account balance reflects the original cash investment plus cumulative income or losses and distributions.Top of Page
States generally require investors to file tax returns if an entity in which they have an investment owns real property in that state. In most cases, income taxes paid to that state may be claimed as a credit against the tax payable to the state of your residence. You should consult your tax advisor regarding the need to file state tax returns in other states and whether estimated tax payments to those states are required.Top of Page