club_cafe: Re: Partial Withdrawal Tax Reporting

iras1 on

Life time, of course. One of the beauties of owning a partnership interest is that you can add and subtract money as much as you want. As the partnership does its thing, its income and expenses get added and subtracted along with your capital contributions. As long as the subtractions (withdrawals) don't bring the running total below zero, you don't have to report the cash as an income item. Once you bring the running total below zero you start to generate taxable gain. Another nice point is that should this happen in the middle of the year, you can add money (more deposits, more earnings) until the end of the year before you have to determine the taxable portion of your withdrawals.

Ira Smilovitz

In a message dated 1/29/2004 4:04:37 PM Eastern Standard Time, lvfgroup@bivio.com writes:

Okay-that makes sense. One more question though. Is that
PIPE for 2003 tax year or PIPE lifetime?

Thank you very much for your help.

John
LVF Investment Club Treasurer

IraS1@aol.com wrote:
> >>During 2003, one of our club members made a partial
> withdrawal of $3,500 to buy an RV.
>
> >>The withdrawal is shown on line 22 of the Schedule K-1...how
> does this person report this on their 1040? Both of us
> tried reading the IRS instructions and, well, we've all read
> those instructions. We'd just like to know how to report it
> correctly.
>
>
> Generally, they don't. If the $3500 was more than their Paid In Plus Earnings at the end of the year, then the excess of the $3500 over PIPE would be reported as a capital gain on Schedule D. If the $3500 was less than their PIPE, it is just a return of capital and it is not reported on Form 1040.
>
> Ira Smilovitz

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