U.S. · Tax forms
K-1 box 20 code W.
Gain or loss you owe when property you contributed is distributed to another partner within 7 years.
Box 20, code W means the partnership distributed property you contributed to a different partner within 7 years of your contribution, so as the contributing partner you recognize precontribution gain or loss under section 704(c)(1)(B). An attached statement gives the amount and its character (for example capital or section 1231). Report it on Form 8949 and Schedule D (Form 1040) or Form 4797 as the statement indicates.
Look up a related K-1 item
Result
Contributed-property items on the K-1
| Item | Meaning | Where it goes (per the IRS instructions) |
|---|---|---|
| 20-W | Box 20, code W: Precontribution gain (loss) | Gain or loss recognized under section 704(c)(1)(B). Report on Form 8949 and/or Schedule D (Form 1040) or Form 4797, per the partnership’s statement |
| ITEM-M | Item M: contributed property with built-in gain or loss | Checked “Yes” when you contributed property with built-in gain or loss during the year; a statement lists the property, date and amount. Provided for your information |
| 19-B | Box 19, code B: Distribution subject to section 737 | Gain you may owe if you contributed built-in gain property within the last 7 years and the partnership distributed other property to you |
When code W appears
Two conditions must hold: the partnership distributed property with precontribution gain or loss to a partner other than the contributor, and the distribution date is within 7 years of the date the property was contributed. If both are true, the partnership enters code W on the contributing partner’s K-1. The statement gives the amount and the character of the gain or loss, and you report it where that character points.
How it differs from code AA and box 19 code B
Code W is the contributor’s gain when the contributed property leaves for someone else. Box 19 code B is the opposite direction: you contributed built-in gain property, then received other property from the partnership within 7 years. Code AA only shows which income or deduction items were allocated to you under section 704(c), with no separate tax calculation.
Worked example
Lee contributed land to a partnership three years ago. This year the partnership distributes the land to another partner. Lee’s K-1 has code W and a statement of the precontribution gain, with its character as section 1231 gain. Because the distribution is inside the 7-year window, Lee reports that gain on Form 4797 as the statement directs. If the distribution had been 8 years after the contribution, section 704(c)(1)(B) would not apply.
More K-1 (Form 1065) pages
Other pages in this set: K-1 (1065) Box 1, K-1 (1065) Box 17, K-1 (1065) Box 18, K-1 (1065) Box 20 Codes A and B, K-1 (1065) Box 20 Code N, K-1 (1065) Box 20 Code V, K-1 (1065) Box 20 Code AH, K-1 (1065) Box 20 Code Y, K-1 (1065) Box 20 Code AA, K-1 (1065) Box 20 Code AB. The 1099-R box 7 lookup and W-2 box 12 lookup cover the same kind of question for those forms.
Sources
- Instructions for Schedule K-1 (Form 1065) (2025): Box 20, Other Information, code W; Item M; Box 19, code B. Read November 2, 2026.
IRS page last reviewed April 30, 2026. Tax year 2025 edition. Line numbers are those printed in the 2025 instructions and can change. Names in worked examples are made up.
Frequently asked questions
What is box 20 code W on a Schedule K-1 (Form 1065)?
Precontribution gain (loss): the amount you recognize when property you contributed is distributed to another partner within 7 years of the contribution.
Where do I report code W?
On Form 8949 and/or Schedule D (Form 1040) or Form 4797, following the amount and character in the partnership’s attached statement.
Why is there a 7-year limit?
Section 704(c)(1)(B) applies only when the distribution date is within 7 years of the contribution date, according to the instructions.
Does code W apply to me if I did not contribute property?
Code W goes on the contributing partner’s K-1. Other partners are not the ones who recognize the gain.
What does item M on my K-1 mean?
It says you contributed property with built-in gain or loss that year. A statement shows the property, date and amount. It is for information and can matter for code W and box 19 code B later.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box or code means for your return. Everything runs in your browser; nothing you enter is sent anywhere.