Are you invested in Publicly Traded Partnership (PTP) investments? Be careful of the tax consequences...

PTPs are, by default, taxed as corporations unless they meet one of the gross income exceptions under the IRC. If the PTP qualifies, it retains its tax classification as a partnership rather than a corporation.

PTP investments issue the owner a Schedule K1 each year, as the PTP itself is not subject to tax, but the owners are subject to taxes on their investment.

If a PTP investment is sold during the tax year, there are significant adjustments to the amounts of capital gain/loss and ordinary gain/loss on the tax returns. Failure to accurately make these adjustments will result in significant variances in a taxpayer's reported taxable income.

Form 8582 for PTP:    • IRS Form 8582 (Passive Activity Loss)...  

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