In a message dated 3/28/2007 1:08:53 P.M. Eastern Daylight Time, vish_ram@bivio.com writes:

my general partnership has invested in shares of SGU, SGU
itself is a partnership and we got the K-1. How do I use the
SGU's K-1?

Should I enter the details of SGU's K-1 in 1065?

How will the club member's K-1 be affected?

Investment clubs should not invest in other partnerships because the accounting is particularly difficult. The regular cash distributions you receive are considered return of capital until the end of the year when you get the K-1. Then you have to reclassify all of the income and expenses reported by the partnership and reconcile to the cash distributions which will usually be different. You'll probably have to ask bivio's support team for a specific workaround for your situation. My general advice is to sell the partnership as soon as possible. It isn't worth the headaches.

 

Ira Smilovitz

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