Updated October 16, 2026. Quick answer: Box 9 of Schedule K-1 (Form 1065) has three lines: 9a net long-term capital gain (loss), 9b collectibles (28%) gain (loss) and 9c unrecaptured section 1250 gain. The 2025 partner instructions send 9a to Schedule D (Form 1040), line 12, 9b to line 4 of the 28% Rate Gain Worksheet, and 9c to lines 5, 10 or 11 of the Unrecaptured Section 1250 Gain Worksheet, depending on the type.
What box 9 reports
Part III shows three lines: “Net long-term capital gain (loss)”, “Collectibles (28%) gain (loss)” and “Unrecaptured section 1250 gain”.
“The partnership uses Schedule K-1 to report your share of the partnership’s income, deductions, credits, etc.” “Keep it for your records.” “Don’t file it with your tax return unless you’re specifically required to do so.”
“Although the partnership generally isn’t subject to income tax, you may be liable for tax on your share of the partnership income, whether or not distributed.” “Include your share on your tax return if a return is required.”
This page covers one box. The full walk through every box on the schedule is on the Schedule K-1 (Form 1065) boxes page.
Where each line of box 9 goes on your return
| Box | What the instructions say |
|---|---|
| 9a Net long-term capital gain (loss) | “Report the net long-term capital gain (loss) on Schedule D (Form 1040), line 12.” |
| 9b Collectibles (28%) gain (loss) | “Report collectibles gain or loss on line 4 of the 28% Rate Gain Worksheet” |
| 9c Unrecaptured section 1250 gain | “Report your share of this unrecaptured gain on the Unrecaptured Section 1250 Gain Worksheet” |
Schedule D is explained on the Schedule D page. The foreign source rule applies to 9a, 9b and 9c alike. “If you have any foreign source net long-term capital gain (loss), see the Partner’s Instructions for Schedule K-3 for additional information.” “If you have any foreign source collectibles (28%) gain (loss), see the Partner’s Instructions for Schedule K-3 for additional information.” “If you have any foreign source unrecaptured section 1250 gain, see the Partner’s Instructions for Schedule K-3 for additional information.”
“If you’re an individual and the passive activity rules don’t apply to the amounts shown on your Schedule K-1, take the amounts shown and enter them on the appropriate lines of your tax return.” “If you aren’t an individual, report the amounts in each box as instructed on your tax return.”
“If the partnership reports a section 743(b) adjustment to partnership items, report these adjustments as separate items on Form 1040 or 1040-SR in accordance with the reporting instructions for the partnership item being adjusted.”
The year to report in depends on the partnership’s year end. “If you file your tax return on a calendar-year basis, but your partnership files a return for a fiscal year, report the amounts on your tax return for the year in which the partnership’s fiscal year ends.” “if the partnership’s tax year ends in February 2026, report the amounts on your 2026 tax return.”
Box 9c: three types of unrecaptured section 1250 gain
“There are three types of unrecaptured section 1250 gain.” The worksheet is “the Unrecaptured Section 1250 Gain Worksheet” in the Schedule D instructions, and each type has its own line:
| Type of unrecaptured section 1250 gain | Line of the worksheet, as printed |
|---|---|
| Sale or exchange of the partnership’s business assets | “Report unrecaptured section 1250 gain from the sale or exchange of the partnership’s business assets on line 5.” |
| Sale or exchange of an interest in a partnership | “Report unrecaptured section 1250 gain from the sale or exchange of an interest in a partnership on line 10.” |
| Estate, trust, RIC or REIT | “Report unrecaptured section 1250 gain from an estate, trust, regulated investment company (RIC), or real estate investment trust (REIT) on line 11.” |
The statement requirement depends on how many types apply. “If the partnership reports only unrecaptured section 1250 gain from the sale or exchange of its business assets, it’ll enter a dollar amount in box 9c.” “If it reports the other two types of unrecaptured gain, it’ll provide an attached statement that shows the amount for each type of unrecaptured section 1250 gain.”
Where unrecaptured section 1250 gain comes from, in the context of rental property sales, is covered on the depreciation recapture page.
Collectibles gain and the sale of a partnership interest
“The information reported in boxes 9b and 9c relates to collectibles (28%) gain (loss) and” unrecaptured section 1250 gain, the second item the same caution names, flowing through the partnership. “If you sold an interest in the partnership, separate amounts of collectibles (28%) gain and unrecaptured section 1250 gain may be reported in box 20, under codes AC and AD.”
“Code AC. Section 1(h)(5) collectibles gain.” “Code AD. Section 1(h)(6) unrecaptured section 1250 gain.” “Even if this information is reported to a partner on multiple forms, it must only be reported on the partner’s tax return once.”
The limits that apply before it reaches the return
“There are potential limitations on partnership losses that you can deduct on your return.” The order is stated too: “the basis limitations, the at-risk limitations, the passive activity limitations, and the excess business loss limitations.”
“Portfolio income or loss (shown in boxes 5 through 9b and in box 11, code A) isn’t subject to the passive activity limitations.” “Portfolio income includes income (not derived in the ordinary course of a trade or business) from interest, ordinary dividends, annuities or royalties, and gain or loss on the sale of property that produces such income or is held for investment.”
Box 9a is a long-term capital line, so a loss there meets the basis rule and the pro rata allocation between categories. “When basis is insufficient, and there is more than one category of loss or deduction items (for example, short-term capital loss and long-term capital loss) that reduces basis, the amount of each category of loss or deduction item that’s disallowed is determined on a pro rata basis.”
Basis comes first. “Generally, a partner may only claim their share of a partnership loss (including a capital loss) to the extent it doesn’t exceed their adjusted basis in the partnership at the end of the partnership’s tax year.” “Any losses and deductions not allowed can be carried forward.” Tracking the figure falls to you: “It’s the partner’s responsibility to track and maintain the information necessary to figure their adjusted basis in the partnership”. The capital account on the schedule does not substitute: “that information is based on the partnership’s books and records and can’t be used to figure the partner’s adjusted basis.”
The at-risk rules come next. “Generally, if you have (a) a loss or other deduction from any activity carried on as a trade or business or for the production of income by the partnership, and (b) amounts in the activity for which you aren’t at risk, you’ll have to complete Form 6198, At-Risk Limitations, to figure your allowable loss for the activity.” The form is explained on the Form 6198 page. “The at-risk rules generally limit the amount of loss and other deductions that you can claim to the amount you could actually lose in the activity.”
The last limit applies to business losses. “Your distributive share of losses attributable to all of the partnership’s trades or businesses may be limited under section 461(l).” “See Form 461, Limitation on Business Losses, and its instructions for more information.”
Corrections and matching
If a figure on the schedule looks wrong, the instructions give one route. “If you believe the partnership has made an error on your Schedule K-1, notify the partnership and ask for a corrected Schedule K-1.” “Don’t change any items on your copy of Schedule K-1.”
Items must also match what the partnership reported, but the instructions tie that rule to the centralized partnership audit regime. “If you’re a partner in a partnership that hasn’t elected out of the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 (the BBA), you must report the items shown on your Schedule K-1 (and any attached statements) the same way that the partnership treated the items on its return.” If your treatment on an original or amended return is inconsistent with the partnership’s, “you must file Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), with your original or amended return”.
Which revision applies
The edition read for this page is the 2025 Partner’s Instructions for Schedule K-1 (Form 1065) together with the 2025 Schedule K-1 (Form 1065) itself, which are the revisions irs.gov served when they were read on 2026-10-16. Check the revision printed on the Schedule K-1 you received, because a later revision can change the box layout, the codes and the reporting lines.
Common mistakes
- Putting all of box 9c on one worksheet line. The instructions give line 5 for the partnership’s business assets, line 10 for a sale of a partnership interest and line 11 for an estate, trust, RIC or REIT.
- Ignoring the statement. The instructions say a dollar amount appears in box 9c only when the partnership reports just the business assets type, and an attached statement shows each type otherwise.
- Counting the same sale twice. The instructions say that where information is reported to a partner on multiple forms, it must only be reported on the partner’s tax return once.
Related: Schedule D (Form 1040), depreciation recapture, Form 4797, and 1099-DIV box 2a capital gain distributions.
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Answer againSources
- 2025 Partner’s Instructions for Schedule K-1 (Form 1065): https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
- Schedule K-1 (Form 1065) (2025), Partner’s Share of Income, Deductions, Credits, etc.: https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.