Confused about K1 Input

Technical topics regarding tax preparation.
#1
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The K1 is prepared by a pretty big hedge fund, so it should be accurate, but I don't understand why everything is jammed into box 11 (code i).

There is absolutely nothing in boxes 1-10.

In the statement details for box 11, however, there are:

dividends (statement says to report on 1040, line 3)
ordinary losses (statement says to report on Sched E, page II)
net short and long term gains (statement says to report on schedule D)
ordinary trader mark to market income (statement says to report on 4797)
etc.

Why, for the most part, are these not in lines 1-10 but instead in box 11 (code i)?

My software (Drake) does not indicate these items on the tax return (it ignores them) when I put them in box 11. Only if I move them to 1-10 "myself" will they show up on the tax return. But I feel like if I do that I might be making a mistake? They must be in box 11 for a reason?
 

#2
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I get a few this way.
I have a worksheet to reclassify these items to the proper categories. The ones I get have items in boxes 1-10 also, though.
I don't know why they are there, but the descriptions allow me to properly report them.
~Captcook
 

#3
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It's my understanding that a fund that takes the position that it is a "trader" will report interest, dividends, cap gains, etc in Box 11. Those that take the position that they are an "investor" will report in Boxes 1-10.

For the former, the income is not portfolio income nor is it passive. I believe it is still subject to NIIT.

For a fund of funds, you might see a mixture of Boxes 1-10 reporting and Box 11 reporting, and that's understandable.
 

#4
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@Captain - it's good to know I can report them elsewhere accordingly and go "outside of the safety of the software", thanks.

@MvT - Intuitive that you mention this. It's actually an amended return I'm working on, and the prior preparer left a few things out and did NOT subject the items to NIIT. When I report the items directly, my software imposes NIIT (but I can override it, of course).

The client is a hedge fund trader (he gets a W2 from the same company as he is employed there) AND he's a partner (but more like a shareholder) - and it says this in the detailed statements in the K1:

BOX 20, CODE Y: NET INVESTMENT INCOME:

PLEASE NOTE THAT THE PARTNERSHIP CONSIDERS ITSELF A TRADER FOR FEDERAL TAX PURPOSES.
ACCORDINGLY, ALL OF THE DISTRIBUTIVE SHARE ITEMS REPORTED ON SCHEDULE K-1 ARE CONSIDERED DERIVED FROM
THE TRADE OR BUSINESS OF TRADING IN SECURITIES OR COMMODITIES AS DEFINED UNDER IRC SECTION 1411(C)(2)(B),
EXCEPT ANY AMOUNT REPORTED IN BOX 14, CODE A. PLEASE CONSULT YOUR TAX ADVISOR WHEN PREPARING FORM 8960.
NO DETERMINATION HAS BEEN MADE WITH REGARD TO SPECIAL RULES FOR TRADERS UNDER PROP. REG. SECTION 1.1411-9(B).
THE TAXPAYER SHOULD APPLY ANY NECESSARY ORDERING RULES AS APPLICABLE.


So it looks like I'm on my own as to adding NIIT or not, and that the answer is "gray"..

I'll do some research.
 


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