K1 Ordinary Income (Loss) reporting.

I have to file a Schedule K-1 Form 1065 for 2008. Do i have to report the income or loss in Box 1 of Part 3 even if i did not sell any of my shares in 2008.
Thanks

K-1 is your income/loss as the owner of those shares in the business. It's not about selling your shares, but about being a part-owner of a company, and having the income/loss of that company pass through to you.

Sorry I can't offer details about line numbers and such -- I'm not a tax professional.

If your partnership had a gross, it must be reported on line 3. It doesn't matter if you withdrew the funds from the partnership or not, that would only impact your degree of ownership.

This is what the tax packages says that is throwing me off. I did not dispose any interest in the partnership. The sum of line 1 to 10 on my schedule are a net loss.

"if you had a net passive loss i.e the sum of lines 1 thru 10 for any activity is negative generally you should not report a loss from that activity on your federal or state tax return unless you disposed all your interest in the XXX prior to Jan 1 09 in a fully taxable transaction."
Thanks

So, the point is that if you had a loss in the partnership, you would not report the loss against ordinary income - as the passive activity loss can only be deducted against passive activity gains, unless you've disposed of your interest in the partnership altogether, which would result in a capital gain or loss.

Which probably means that i am not going to show a "business income " of zero on line 12 of my 1040 since i have disposed no shares in the partnership.

line 12 - Business income or loss

Thanks

So, the point is that if you had a loss in the partnership, you would not report the loss against ordinary income - as the passive activity loss can only be deducted against passive activity gains, unless you've disposed of your interest in the partnership altogether, which would result in a capital gain or loss.
Hey, Blank!

Good to see you in the April issue of Money magazine!

Thanks! I haven't seen it yet, but had heard about it... :0