Partnership Taxation Capital base question?

Raka maka on

I have simple and maybe silly question about partnership taxation.
example : partners A and B put together $6000 and $4000 at the start of year 2014 in Fidelity brokerage. brought some stocks for all of $10000.
during the year..(assume no dividends received and none of partner withdraw any amount from club)
sold some of the stocks realized gains of $3000
sold some of the stocks and realized Loss of $1000
Thus total realized gains of $2000
The remaining stocks continue to grow and by end of year 2014 the total value of fidelity brokerage account remains at $14000
now if partner A and B proportionately(60/40%) share gain/loss what will each pay taxes on? Is it based on realized total gains of $2000 or increased capital account of $4000?
What will K-1 form look like for A or B? especially column J, 8 and 9a?
Thanks

Laurie Frederiksen on

The K-1 reports the realized gains and losses allocated to each club member. "Realized" means the gains and losses from stocks that were sold.

If you compare the member tax allocation report for 2013 to a K-1 for a member in 2013, you will see how the information flows to the K-1.

Laurie Frederiksen
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On Mon, Jan 12, 2015 at 12:54 PM, Raka maka < > wrote:

I have simple and maybe silly question about partnership taxation.
example : partners A and B put together $6000 and $4000 at the start of year 2014 in Fidelity brokerage. brought some stocks for all of $10000.
during the year..(assume no dividends received and none of partner withdraw any amount from club)
sold some of the stocks realized gains of $3000
sold some of the stocks and realized Loss of $1000
Thus total realized gains of $2000
The remaining stocks continue to grow and by end of year 2014 the total value of fidelity brokerage account remains at $14000
now if partner A and B proportionately(60/40%) share gain/loss what will each pay taxes on? Is it based on realized total gains of $2000 or increased capital account of $4000?
What will K-1 form look like for A or B? especially column J, 8 and 9a?
Thanks

Raka maka on

Thanks for reply. Does it mean partners will pay taxes(as per their individual tax rates) on realized gain portion of $2000($1200/800) which should be included in 1040. And simply forget about capital increase of club by $4000?
Am I right or missing something?

Laurie Frederiksen on

Partners are taxed on gains when they are realized. This is when the club sells the shares. They is no immediate taxation of unrealized gains.

bivio will handle all of this for you and put the right amounts in the right places on your tax forms. It will also track the member accounts accurately to reflect this taxation.

On Mon, Jan 12, 2015 at 2:07 PM, Raka maka <rakamaka@inbox.com> wrote:

Thanks for reply. Does it mean partners will pay taxes(as per their individual tax rates) on realized gain portion of $2000($1200/800) which should be included in 1040. And simply forget about capital increase of club by $4000?
Am I right or missing something?

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