Apr 18, 2025
ECI Calculation for Form 8805
[4.18.2025]
Net ordinary income/loss = Sum of all K-1 income lines (except for Lines 8,9,10) - Sum of all K-1 deduction lines (except for Line 13A, 13H). Interest expense is a partner level deduction.
For section 1446 tax purposes, the ECI ordinary loss allocable to a foreign partner can offset the ECI capital gain allocable to that foreign partner, assuming the ECI ordinary loss is passive and the ECI capital gain is from either the sale of the partnership interest that generates the passive income/losses or from a 1231 gain resulting from the sale of assets of the passive activity.