Tax Preparation for LP's
I think I'm done with my current CPA. I had two final K-1's this year -- both total losses. One resulted in a large net 1231 gain that flows right onto Schedule D. He couldn't explain why, but it is taxed as a long-term capital gain - on an investment that was a total financial loss.
So I started digging into this. Tax is not my speciality, so I always have to refresh my memory on how these work.
There were 3 years of prior net losses. The previous year shows a large deductible loss on Form 6198 At-Risk Limitations. But for some reason it's not there on the Form 8582 Passive Activity Loss Limitations. So was it allowed or not? If it was at-risk, it should be disallowed due to passive activity loss limitations and suspended, right? On Schedule E it shows "At-Risk" is checked but there are all zeros for the amounts.
I'm sure the answer is there, but that I have to prompt him to go through the prior year returns is frustrating. The forms that he generates using his software are missing information that is needed to account for the suspended losses. Every year is a struggle: waiting for sponsors who are always late delivering K-1's, trying to find errors and omissions on the return, filing amended returns. Not understanding if the output is correct.
Are there better options?
I have a large number of K-1's that generate multiple state returns so it's a big job and it costs a lot to prepare my returns. It already hurts to pay the fee I'm paying, as I'm losing money on nearly all of these, so I wonder if a firm that specializes in LP tax returns is going to be even more expensive. But I never have a good feeling about the return that I get.