I assume this was a PTP or MLP - the PTP box was checked on the k-1.
do you know that it's almost an absolute certainty the cost basis shown on the 1099-B is wrong? brokers do not get the info necessary to update tax basis so they use the purchase price.
FYI. the sale goes on the 8949/ schedule D and is not reported through the K-1 disposition section. using it could result in reporting the sale twice on the 8949 which will result if you enter all the sales from the 1099-B.
also, this will be shown as type C or F on the 8949. this section is only for the ordinary income that results
MLP/PTP reporting k-1 and 8949
Please follow these instructions. Incorrect entries can result in entering the sale twice or result in other errors. Also, see the sales schedule that was included with the k-1
Enter the k-1 info
Check the PTP box
If total disposition then proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of the entire interest
Use QuickZoom to get to the following section (may only be available on desktop versions) but in the online versions, you should eventually get to a screen to enter this info.
On the k-1 disposition section for sales price use the ordinary income (sometimes you’ll see a column with the “751” or the words “Gain subject to recapture as ordinary income”. This info comes from the supplemental sales schedule that should have been provided.
Cost is zero
Ordinary income is the "751" amount
This info flows to form 4797 line 10 as ordinary income.
Now for the 8949.
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. The correct tax basis is:
What you paid originally, should be the same as what is on 1099-B as cost,
Then there is a column on the sales schedule that says "cumulative adjustment to basis". If it’s positive add it to the original cost. If it’s negative subtract the amount.
Finally, add the amount of ordinary income reported above.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20Z1. That number should be added to the ordinary income above for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.
