When will I receive my K-1 for the previous tax year?

Lilypads provides you the tax information for the previous year as it becomes available:

 

  • By the end of February: You can expect to receive a summary of your investments that will have a K-1.
  • By the end of March: Lilypads will publish a tax bundle that will include a K-1 or an estimate for all aggregated investments that require a K-1 for the preceding tax year.
  • Post-March: once all pending tax information is received and processed, Lilypads will update those tax packages with final K-1s that have multiple estimates for Portfolio investments.

How can I estimate my taxes before receiving a K-1?

Lilypads reports taxable income and losses to its fund Investors on a Schedule K-1. Partnerships provide tax estimates regularly to the partners for enhancing their visibility into their expected taxable income before the schedule K-1 is prepared and finalized for the partner. 

 

Generally, fund Investors use these tax estimates to make an estimated tax payment before filing their final tax return. On the other hand, some Investors use taxable income estimates in the place of the actual K-1. 

 

Therefore they include these estimates in their final tax returns whereby if the final K-1 is different from the estimate, they either modify their file return or include the outstanding amount in the tax returns for the following year.

What happens if I receive a tax estimate instead of a final K-1 for the return?

Although our tax estimates are based on the most accurate information which makes them dependable and highly similar to the final returns, you may find some differences from the final K-1s.

Why won’t I receive a K-1 for the past year even if I invested in a fund during the previous tax season?

This is generally applicable to those SPVs that invested exclusively in SAFE’s or made equity investments in corporate entities.

 

If the fund that you invested in did not generate any taxable income or incurred losses you would not require a K-1. This is because tax returns and K-1s should only be filed with the IRS on the occasion of earning taxable income or even facing losses, which are subject to be reported for that particular tax year.

Why didn’t I receive a distribution when my K-1 is showing taxable income?

 

This can occur when you invested in a fund that is further invested in an operating Portfolio vehicle or asset that passes their taxable income without generating cash distribution.

How will I know whether an exit qualifies for Section 1202 (QSBS gains rate) or Section 1045 (Rollover) tax treatment on returns?

To be eligible for Section 1045 and Section 1202 QSBS, the Portfolio vehicle or asset must satisfy the required criterion for both the tax treatments.

 

The QSBS status for an investment return is stated in the K-1 for that particular year in which the investment had generated taxable gains that qualify for QSBS.

 

On the other hand, Section 1045 states reinvestment within 60 days of the previous vehicle’s exit is necessary for benefiting from the tax scheme.

Am I eligible for receiving K-1s for the investments that I made through my self-directed IRA?

 

Yes, you will receive K-1s for all investments that you make through your self-directed IRA account. However, those K-1s will be sent directly to your IRA administrator.



This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.