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Question

Why are 28-percent capital gains and unrecaptured section 1250 gains not proportional to total long-term gains on the Schedules K-1?

Answer

According to the Form 5227 instructions, distributions for long-term capital gains are distributed in order of taxability. Investment 28-percent gains is distributed first, followed by investment 25-percent gains, excluded 28-percent gains, excluded 25-percent gains, investment other long-term gains, and finally excluded other long-term gains. You can see this calculation on the Capital Gains Distribution Worksheet in forms view.

Related topic: 1041-US: Form 5227 FAQs

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