1065-US: Distribution in excess of partner basis in Schedules K-1 (FAQ)

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Question

Why do the Schedules K-1 state that there is a distribution in excess of partner basis?

Answer

IRC section 705 states that partner basis cannot be decreased below zero. When distributions or decreases in the partner's share of partnership liabilities would decrease the basis below zero, a deemed distribution restores the basis to zero.

Note: To suppress this statement from displaying on Schedule K-1, box 20 - Other information, mark the Suppress K1 supplemental detail of distributions in excess of basis field in Screen Basis.

Related topic: Partner basis FAQs (1065)

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