As a limited partner in LLC that did a 1031 exchange, do I need to file form 8824 on my personal tax return?

If the syndication is filing as a partnership (which most do), wouldn't the reporting responsibilities pass through to the partners? I was under the impression that the partnership itself files an information return but the actual tax obligations flow to the individual partners...

You're absolutely right that partnerships file information returns and the tax obligations generally flow through to the partners. That's exactly why the individual limited partners often need to report their portion of the exchange on their personal returns. When a partnership completes a 1031 exchange, each partner's proportionate share of the deferred gain and other exchange details typically flows through to them. The partnership's Form 8824 reports the entire transaction, but each partner usually needs to report their individual portion on their own tax return, which may require filing their own Form 8824.

How exactly does this service work? Does it just scan your documents and tell you what to do or does it actually fill out the forms for you? My LLC did a 1031 last year too and I'm totally lost with all these statements and supplemental documents they sent.

I'm a little skeptical of these tax document analysis services. How accurate was it really? Did you have a tax professional review what it recommended before filing? Seems risky to trust an automated system with something as complicated as a 1031 exchange.

The service scans and analyzes your documents, then provides specific guidance on what forms you need and what information goes where. It doesn't complete the forms for you, but gives you detailed instructions that you can follow yourself or share with your tax preparer. It's actually quite accurate in my experience. I did have my CPA review the recommendations, and he confirmed everything taxr.ai suggested was correct. He was impressed with the level of detail it provided, especially regarding which lines on Form 8824 needed specific amounts from my K-1s. It saved him time figuring it out, which saved me money on his hourly rate.

Wait, this actually works? I thought it was impossible to get through to the IRS these days. How much did they charge you for this service? I've been on hold for literally hours trying to get clarification on partnership 1031 reporting.

This seems too good to be true. The IRS agent actually gave you specific tax advice about form 8824 and K-1 reporting? In my experience they usually just refer you to publications and refuse to give any specific guidance. I'm finding this hard to believe.

Yes, it absolutely works! They use some kind of system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is about to pick up. I was genuinely surprised at how well it worked after weeks of frustration. The IRS agent was actually quite helpful with my specific situation. You're right that they sometimes just refer to publications, but when I asked very specific questions about which lines on Form 8824 corresponded to specific items on my K-1 supplemental statement, the agent was willing to walk through it with me. I think it helped that I had all my documents ready and asked clear, specific questions.

Thanks for this detailed response! The basis tracking part is what's confusing me. My K-1 has a supplemental statement about "tax basis capital" that changed after the exchange. Is this the basis I need to track, or is there something else I should be looking for? The statement mentions something about "704(c) forward section 1231 gain" that I don't understand.

The "tax basis capital" on your K-1 is related to your basis, but it's not necessarily the exact number you need to track for your personal tax situation. This gets complicated because partnerships can use different methods for tracking capital accounts. What you need to focus on is your "outside basis" in the partnership interest. Generally, your outside basis in the new partnership should equal your outside basis in the old partnership, adjusted for any boot received or liabilities assumed during the exchange. That "704(c) forward section 1231 gain" reference indicates deferred gain that's being tracked at the partnership level under section 704(c). This will affect how future depreciation and gains are allocated to you. It's essentially tracking your share of the built-in gain that was deferred in the 1031 exchange. When the new property is eventually sold (without another 1031), this deferred gain may become taxable to you.

I used TurboTax Premier last year for this exact situation. It does support Form 8824, but the interface is clunky. You have to manually enter a lot of the information from the supplemental statements attached to your K-1. The program doesn't automatically pull the 1031 exchange info from the K-1 entry screens.

Thanks for confirming! I'll stick with Premier then. Did TurboTax guide you through which numbers to enter where, or did you have to figure that out yourself? My supplemental statement has about 10 different numbers related to the exchange and I'm not sure which ones need to go on which lines of Form 8824.

TurboTax Premier can handle Form 8824, but honestly the guidance is pretty limited for complex partnership exchanges. You'll need to manually figure out which numbers from your supplemental statement go where on the form. I found myself constantly referring back to the IRS instructions for Form 8824 and Publication 544 to make sure I was entering things correctly. The software asks for the basic exchange information but doesn't really help you interpret the partnership-specific details from your K-1 supplemental statements. If your situation is straightforward it should work fine, but if you have complications like boot received or multiple properties involved, you might want to consider getting professional help rather than trying to navigate it solo in TurboTax.