How do I enter "other income" from line 11 of partnership schedule K-1?

HereFishyFishy

My wife has income derived from sale of vacation home that was the sole asset of a partnership with her siblings that was dissolved last year. Her share of the net proceeds was reported as other income (Code S, Gain from long-term sch d) on line 11 of the partnership K-1. The partnership was not publicly traded.

Free tax usa pops up the following warning:

Enter Income Elsewhere

Amounts entered in Box 11 of your K-1 with certain codes need to be entered elsewhere depending on what type of income it is. The partnership will usually attach a statement to your K-1 explaining what type of income was included in Box 11 of your K-1.

But it's not clear to me where else precisely to enter this income so that it will flow to our personal Schedule D.

I've seen some online guidance suggesting entering it as though it were a long term gain on a stock sale reported on a 1099-B with a cost-basis of zero. Can that be right?

JohnV

Hello HereFishyFishy, The FreeTaxUSA alert is so that you have to report in the correct section and provide more details on this reporting. The Form K-1 only report the net proceeds, but more information is needed so the gains can be taxed appropriately.

If the vacation was an investment property, then you would have to report it under Income > Investments and Savings > Add Investment > Other Sales > No tax form received.

You would then enter the date the vacation home was purchased, and when it was sold, her share of the sales proceeds, and her share of the cost basis of the house. The difference between the sales proceeds and cost basis will be the gains of the sales, which could be her net of the sales proceeds. Or it may not, since the net proceeds could have more in it that we do not know.

You cannot just report the net proceeds and then 0 for cost basis so that the net proceeds is the gains. You have to ask the partnership for more information to report the sales correctly.