Got a K1 from investment fund during lockup period - Taxable or not taxable?

Thanks for the quick response! So even though the fund company specifically told me not to include it because of the lockup period, I should still report it? That's really concerning because I already filed without including it based on their advice. Would I need to file an amended return now?

Yes, you absolutely need to include it regardless of what the fund company told you. Unfortunately, their advice was incorrect. Partnership income flows through to your personal return in the tax year it was earned by the partnership. You should file an amended return (Form 1040-X) as soon as possible. The IRS has already received a copy of your K1, so there's a high chance they'll notice the discrepancy. Filing an amendment before they contact you is much better than waiting for a notice.

How does taxr.ai work exactly? Does it just give generic advice or does it actually look at your specific documents? I've gotten burned before by tax "tools" that just spit out general info I could find on Google.

I'm a bit skeptical. Couldn't you just ask a real accountant instead? How much does this cost compared to a 30-minute consultation with a CPA? The partnership rules seem pretty straightforward here.

It actually reviews your specific documents using AI - you upload your K1 and any related documents, and it analyzes the specifics of your situation. It's not just generic advice, it's tailored to your actual paperwork and circumstances. I was impressed because it caught specific provisions in my operating agreement that affected my tax situation. It's much more affordable than a CPA consultation, especially during tax season when they're charging premium rates. I spent way less than what my CPA friend quoted me for reviewing the same documents, and I got the answers within minutes instead of waiting days for an appointment.

Wait, how does this actually work? Does Claimyr just wait on hold for you? I'm trying to imagine how a service could magically get through the IRS phone system when millions of people can't.

This sounds like complete BS. The IRS doesn't give preferential treatment to calls from certain services. I've worked in tax for years and there's no "secret backdoor" to reach the IRS faster. You just have to be persistent and call at the right times.

It doesn't give you preferential treatment - it basically automates the hold process. Their system calls the IRS, navigates through all the menus and prompts, and waits on hold for you. When an agent finally picks up, you get a callback. It's literally just saving you from having to sit on hold for hours. They use software that interacts with the IRS phone system exactly like a human would, but it can do it for multiple people at once. There's no special treatment - it's just automating the tedious part. I was skeptical too, but when I got a callback from an actual IRS agent after trying unsuccessfully on my own for weeks, I was convinced.

Yes, that's exactly what happens and it's called "phantom income." It's one of the downsides of partnership investments. You're taxed on your share of partnership earnings whether or not they distribute that cash to you. Think of it this way: the partnership is not a separate taxpayer - it's a pass-through entity. So when the partnership earns $100, and you own 10%, it's treated as if YOU earned $10 directly, regardless of whether they distribute that $10 to you or keep it in the business. The lockup only affects when you can withdraw your capital, not when income is recognized for tax purposes.

No, you don't get taxed twice. When you eventually receive distributions, they're generally not taxable again (assuming they don't exceed your basis in the partnership). The distribution is basically a return of capital that you've already paid tax on. Your basis in the partnership increases by your share of income (that you've already paid tax on) and decreases by distributions. This accounting mechanism prevents double taxation.