Does TurboTax 2022 handle K-1 (Form 1065) reporting for sales based on the K-1 interview OR do I also need to enter 1099-B from my Brokage (with updated cost basis)?

[desperado]

Hi,

do the brokers HAVE to report it as B or E? Ameritrade correctly reported as B and E (same partnership, different sales) but Robinhood reported as D (same partnership). I contacted them about it and they didn't want to change the 1099B, saying "we cannot know what it has to be" and "just use K1", and "we don't even actually report it to IRS".

Did I need them to report it correctly? Or can I just change basis, (as I did) and now it will show on taxes as an adjustment... while the Ameritrade ones correctly only show the amended basis, but no adjustment (in column g in form 8949)? Judging from note on form 8949 I should be ok, but double guessing myself now...

Thanks all

[nexchap]

@desperado  Brokers have no way to know the correct cost since they don't receive the K-1, so there's no way for them to correctly issue a 1099-B with codes A or D.  But a broker who says things like "we cannot know what it has to be" and "we don't even actually report it to IRS", when they've just issued a 1099-B that literally says they're reporting cost to the IRS, is probably not going to grasp this.  Ideally, talk to someone else with a better grasp of tax reporting to get a corrected 1099.  If they refuse, keep good records (perhaps document the issue with Robinhood in writing, so you can produce that later).  You still need to make the correction, but if they IRS ever ask about the discrepancy you'll have an easy explanation. 

[dpreas2017]

@desperado @nexchap I'll provide what I did if helpful.  With the guidance from Nexchap, using the K-1 provided from the MLP, I completed the TT K-1 interview, noting the sells (ordinary gains/AMT) as provided in the K-1 sales schedule and entered the cost basis as the inverse of the amount provided.

In my case, by broker provided a 1099-B as NOT reported to the IRS, with an incorrect cost basis.  Using the TT 1099-B interview, I added the MLP sales as short-term (in my case) NOT reported to the IRS.  Right or wrong, I chose to enter the sales shown in the 1099-B, and then to add an adjustment to correct the cost basis per the K-1 sales schedule noting that the cost basis is incorrect (from the list of reasons in the TT adjustment screen).  The reason I chose to use the adjustment option is that TT requires that you attach a copy of the 1099-B NOT reported to the IRS to conclude the 1099-B interview, stating that the IRS needed it.  I figured it may make more sense to the IRS to see that an adjustment was made compared to the 1099-B, although I'm not too sure how the adjustment entry was ultimately recorded in my final 1040.

[stevew7]

This thread has been extremely helpful, thank you @nexchap and everyone for weighing in!  If I understand correctly, assuming the sale is listed as "Cost basis not reported to IRS", you would fill out these details in the K1 sale information...

In the box "Sale price", this is obtained off the 1099

Partnership basis is the "cost basis", box 6 (sum of box 4 and 5)

Ordinary gain, is transferred in as Box 7

It appears the AMT Gain or Loss column, it automatically transfers the partnership basis over.

In mine, I have a number in box 8 (AMT Gain/Loss Adjustment), do I need to add that number to box 7?  Or just leave it as what is reported in box 8?

I also have 2 additional boxes with the headline "adjusted for bonus depreciation" and again 2 sections "cumulative adjustment to basis" & "ordinary gain", where do I report those?

[nexchap]

@stevew7 You don't want any Cap Gain/Loss information in the K-1 sale information.  The sales price is $0, and the Cost Basis is the inverse of the Ord Gain.  When you go to the next screen, where it summarizes your gain on the sale, it'll show $0 Cap Gain.

You account for the cap gain over in the 1099-B interview, by adjusting the cost there.

On your other questions

- Add the AMT adjustment to the Ord Gain to figure the AMT amount

- The bonus depreciation adjustment only applies to the state return, and only in states that are 'non conforming'.  You can google to determine if your state is non conforming.  If so, bonus depreciation is handled differently but how to enter the adjustments will depend on the specifics of the state (and is outside my expertise).

[stevew7]

Thanks @nexchap .  Are you saying, on my 1099-B, if the stock purchase was 10,000 for example, and my sales schedule says my cost basis is 5,000, I should be editing that in the 1099-B section?  Do I check the box that says "The cost basis on my statement is incorrect" and then write 5,000?  Or should I just edit it on the main sale page where the number is imported/entered in box 1e?