staceyahyman88011 asked:
I am involved in a partnership that will default on a bank note, but I did not incur the debt; I merely invested money. The partnership will be dissolved this year. I will recover nothing. According to The CPA Journal this loss is ordinary not capital because my investment becomes worthless/abandoned.
I am involved in a partnership that will default on a bank note, but I did not incur the debt; I merely invested money. The partnership will be dissolved this year. I will recover nothing. According to The CPA Journal this loss is ordinary not capital because my investment becomes worthless/abandoned.
The partnership will have to file its own tax return, and you will receive a Schedule K-1 showing your share of profit, loss, etc. In this case, it should be a loss of your invested capital. You will take the information from the K-1 and report it on Schedule E of your personal income tax return. This will flow through to line 17 on page 1 of your 1040. Don’t try to anticipate the loss amount - wait until you receive your K-1 from the partnership to file your tax return, even if you have to extend your personal return to do it.
Hope this helps!!