Does anyone own the publicly traded MLP's Energy Transfer Partners and Sunoco Logistics?

[tyhunt56]

Thank you for the great explanation above regarding the K-1s for ET & ETP.  I had  a similar concerns and this will help in entering the information.  Question:  The ET K-1 shows a built in gain due to the ETP to ET exchange.  How is this built in gain reported in system (if at all).

[loritaka]

What happens with the liabilities for ETP that I've been including in my partner's basis?  Does the change from $25k in liabilities in 2017 to $0 in liabilities in 2018 become income for me if I don't have enough basis to absorb the $25k?

[nexchap]

@tyhunt56:  I didn't have to deal with this particular issue this year (I have ET, but didn't have ETP earlier in the year), so I didn't personally see this issue.  What line / where is it being reported?  I may be able to figure it out.  Otherwise, its probably worth asking as a standalone question.

[nexchap]

@loritaka:  This is worth posing as a separate question.  Since ETP was absorbed by ET, you're ending 2018 basis is whatever is shown on your ET K-1.  If you've been making entries to keep your basis at 0, then you'd continue to do so.  But there's also the question of what entries, if any, may be needed for the ETP to ET transfer (which depends on what basis was transferred) and that's something I don't know.

[loritaka]

@nexchap Thanks for your help!

[tyhunt56]

The built-in gain box is checked "Yes" in Part II of the new ET Schedule K-1. Also, there is a separate statement in the K-1 package that lists FMV of ETP units, Tax basis of ETP units and the Built-in Gain value (1k).  The IRS instructions reference box 20 code W (Pre-contribution gain/loss) and box 19 code B (Distribution subject to section 737).  However,  it is worth noting that on my K-1 both box 20 code W & box 19 code B are blank. So maybe there is nothing to do? Thx for reviewing.

[nexchap]

@tyhunt56 I try to only comment on stuff I've had to research / deal with myself, and this is outside of that.  I do know that stuff that doesn't appear directly on the K-1 (e.g., Sales Schedules) must still be dealt with at tax time, so its very possible that the info on that extra statement must be entered somewhere.  Three suggestions: 1) I always make sure I can duplicate the math that goes into the MLP's capital calculation.  That tells me which items they're giving me are sources of income, which are deductions, and which aren't tax related.  So if you can figure out whether that $1k was part of the math for your capital calculations, you'll know if its taxable.  2) Googling on the boxes sometimes surfaces things.  And 3) There's always asking about it specifically on this thread.  Sorry I can't be more help.

[tyhunt56]

@nexchap Thank you for reviewing the question and your suggestions.

[gbern]

I am equally confused on the additional page Energy Transfer (ET) included in the Tax Package for the ETP to ET transfer.  It is titled "Built In Gain/Built In (Loss) Statement."  It states "On October 19th, 2018 you contributed your ETP units to Energy Transfer LP ("ET") in exchange for ET common units.  An asset contribution to a partnership would result in a built in gain or (loss) to be recognized by the partner as the units are disposed.  The tax basis reported below is based on information provided to the Partnership by you or your broker, or the amount used to determine your share of allocable gain or loss."..."This statement is provided by the Partnership to report the built in gain or built in (loss) generated by an investor's exchange of property for ET units."
Gives 3 entries: "Fair value of contributed ETP Units" and "Tax Basis of Contributed ETP Units" and "Built in Gain/Loss".
My question:  Is this reportable on 2018 taxes or is this to be used when sold in future?

[gbern]

I got an answer from ET regarding my question above:  Got the answer from Energy Transfer in written form and on the telephone):
"The built in gain schedule in the ET tax package is informational only.  If you look on the K-1 itself, you'll see a Box "M" that asks whether or not property with a built in gain or loss was contributed to the partnership during the year.  For all of the legacy ETP partners that held through the ETE/ETP transaction, the form of the transaction was a contribution into ETE by all of the public ETP partners of their ETP units (i.e. property and not cash) in exchange for ETE/ET units.  Since virtually every ETP partner would have had a difference in the value of their respective ETP units versus their adjusted tax basis, virtually every partner is deemed to have contributed property (i.e. ETP units) with a build in gain or loss (i.e. the difference in the FV of the ETP units immediately before the transaction and the adjusted tax basis of the units).  If Box "M" on the K-1 is checked "Yes" (which it should be for virtually every former ETP partner that participated in the ETE/ETP tranasaction), we are required to attach an informational statement to the K-1."

[tyhunt56]

@gbern.  Thank you for posting this explanation.  Back to your question above regarding "is this reportable on 2018 taxes or is this to be used when sold in future", how are you reporting built in gain/loss in 2018?  Assuming then gain/loss will be recognized when sold in future.