Basis Limitation on a Personal Return for a Business Activity (Partnership)

Forum|Forum|5 years ago
June 8, 2021
1 reply
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I have a married couple with an LLC based in a non-community property state. Thus, the LLC files as a partnership. The partnership is profitable and passes a K-1 to each partner. As the couple live in a community property state and is filing jointly, I combine them. The opening adjusted basis plus additional investments during the year plus the LLC's pass-through income less distributions to the partners is positive. However, ProConnect calculates a basis limitation, resulting in carryover. This does not seem right. The Federal Basis Limitation Worksheet Page 1 cites a negative Adjusted Basis at End of Year. How can this be?

ProConnect Tax

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Best answer by prkwork

I have entered the correct distributions amount from the K-1s as Line 19A (two detail lines within this entry, showing by partner name) on the Partnership K-1 entry screen. I see this on the worksheet by partner name, but the worksheet also has the distribution labelled "Current year distributions of money". I don't see where this could come from.

sjrcpa

Level 15

Have you checked the basis computation worksheet for errors (yours or the software's)?

The more I know the more I don’t know.

P

prkworkAuthor

Level 4

1. If you mean the At-Risk Limitation Worksheet, that looks fine.

2. The "Basis Limitation (Federal Basis Limitation Worksheets)" is where the problem lies. It causes some tax basis carryover. "Basis Limitation (Schedule of Loss Limitations)" shows certain expenses "Disallowed due to Basis Limitation".

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