What is the meaning of the Recourse line in area K (Partner?s share of liabilities at year end) of a Schedule K-1? Where does it go in a Form
1040? Is it perhaps the capital loss after the partnership was closed?
The context is that last year, my wife and a friend started a partnership. After a couple of months, the partnership was wound down. We have a K-1 reporting ordinary and self-employment income loss of (in round numbers) $5000 with $300 in AMT items. It shows 50% beginning and
39% ending shares of profit, loss and capital. In area K, ?Partner?s share of liabilities? is shown as ?Recourse $2000?. Of course, there was also our initial cash investment and a check for the sale of my wife?s interest resulting in a loss of $6600.
I?m still working on last year?s taxes.
Mike