ShawnE Posted April 10, 2011 Report Share Posted April 10, 2011 I have a client that invested into a real estate development partnership (I'm in Las Vegas). In prior years, they got the K-1 fine, but this year... The company's property assets have been foreclosed on, the main partners won't answer or return calls, one secretary that the client could reach said that it was closed and there would be no k-1 or tax return. Last years K-1 shows an ending capital account of 17,857.00 and a Qualified Non-Recourse Financing of 70,532.00. His ownership is less than 2%, and they marked both Domestic partner and Limited Partner. Other than the fact that they HAVE to do a final tax return (good luck with that), what can I do? And yes they need to see a lawyer - but that don't help get this return out the door. HELP Shawn Quote Link to comment Share on other sites More sharing options...
rfassett Posted April 10, 2011 Report Share Posted April 10, 2011 Calculate his remaining basis as of the end of last year and write it off as a defunct investment. I would put an explanation in the return reiterating the facts as you know them as to why there is no K-1 activity for the current year. Quote Link to comment Share on other sites More sharing options...
ShawnE Posted April 10, 2011 Author Report Share Posted April 10, 2011 Thanks rfassett, pretty much figured that was what I needed to do but needed to hear it. Sch D - limit 3000 bummer. Should I mark it as worthless stock? I have ATX - it has that transaction type box on the Sch D input. Or should I just leave that blank - and let the statment explain it. Quote Link to comment Share on other sites More sharing options...
jainen Posted April 11, 2011 Report Share Posted April 11, 2011 >>reiterating the facts<< IRS doesn't much care about the back story. They want to know what you based your estimated numbers on. Quote Link to comment Share on other sites More sharing options...
rfassett Posted April 11, 2011 Report Share Posted April 11, 2011 The explanation is necessary to explain why there is no K-1 info on a return this year when there was no "final" K-1 issued last year. And the explanation is good, if for no other reason, to have with the return in the preparer's file so two or three years from now, if the IRS decides to take a look, the preparer is not scrambling trying to recreate the "story". I do not know, ShawnE, if it is necessary to have the "worthless stock" item selected. I do not think it matters one way or the other as long as you have the other info correct. Quote Link to comment Share on other sites More sharing options...
ShawnE Posted April 11, 2011 Author Report Share Posted April 11, 2011 Thanks again :) Quote Link to comment Share on other sites More sharing options...
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