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Updated over 2 years ago, 04/18/2022

User Stats

65
Posts
61
Votes
Kurt Granroth
  • Rental Property Investor
  • Gilbert, AZ
61
Votes |
65
Posts

Determine Adjusted Basis and Sale Price from LP K-1 After Sale

Kurt Granroth
  • Rental Property Investor
  • Gilbert, AZ
Posted

Let's say I was an LP on an apartment complex that sold this year and while answering TurboTax's questionnaire, it asks for two very fundamental bits of information - the Adjusted Basis and Final Sale Price.  As basic as those are, I'm not 100% certain I know how to decode that info from my K-1.

My K-1 the year of the sale has the following (fictitious-but-plausible) values:

Line 2 (Net Rental Loss): -$3,000
Line 9a (Net LTGC): $40,000
Line 10 (Net Sec 1231 Gain): $6,000
Line 19-A (Distributions): $75,000

Section L:
Beginning capital account: $41,500
Current year net income: $43,000
Withdrawals & distributions: $75,000
Ending capital account: $9,500

In this example, my "Adjusted Basis" was the same as my "Beginning capital account" ($41,500) at the beginning of the year, as far as I know from from this, but can I decipher the Adjusted Basis at the time of the sale?

And what about the Sale Price? The 19-A Distribution line for this year includes the return of my capital + distributions prior to sale + "preferred rate catch-up" + profit waterfall... but it's not clear to me that that's (my portion of) the actual Sale Price, if only because none of the other values add up to it precisely.

For background, here's the relevant bits of my K-1s in this example for the previous years:

Initial Capital: $50,000

Year 1 Line 2: -$400
Year 1 19-A: $600

Year 2 Line 2: -$2,000
Year 2 Line 19-A: $1,500

Year 3 Line 2: -$2,500
Year 3 Line 19-A: $1,500

Subtracting the depreciation loss (Line 2) and distributions (Line 19-A) from my initial capital each year does result in the $41,500 at the beginning of the sale year, so that does make sense to me that that's the Adjusted Basis at that point.

So yeah, given all that, can I extract the Sales Price and Adjusted Basis at the time of the sale from the K-1s I have on hand or do I need to reach into supplementary materials?

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