What is the 'build-in gain/loss impact of Energy Transfer LP (ET) acquiring Energy Transfer Partners LP (ETP) to individual shareholders?

[jwsestate]

Is this to be reported on 2018 taxes?  Additional forms needed?  Where to enter info?

[boiscro]

I don't believe so, assuming you still owned ET at 12/31/2018 ... see IRS Partner's Instructions for Schedule K-1 (Form 1065), Part I, item M (checked yes on my ET K-1).  Since no box 20, code W, and no "distributions subject to section 737, see the instructions for box 19, code B", on my ET K-1, it appears this statement is FYI only, for use at some future date when you dispose of your ET units.

[boiscro]

here is the full text of IRS instruction:  Item M
If you have contributed property with a built-in gain or loss during the tax year, the partnership will check the “Yes” box. Also, the partnership will attach a statement showing the property contributed, the date of the contribution, and the amount of any built-in gain or loss. A built-in gain or loss is the difference between the fair market value of the property and your adjusted basis in the property at the time it was contributed to the partnership. If you contributed more than 10 properties on a single date during the tax year, the statement may instead show the number of properties contributed on that date, the total amount of built-in gain, and the total amount of built-in loss.
The partnership is providing this for your information. Contributions of property with a built-in gain or loss could affect a partner's tax liability (in matters concerning precontribution gain or loss, and distributions subject to section 737), and may also affect how the partnership allocated certain items on your Schedule K-1. For information on precontribution gain or loss, see the instructions for box 20, code W. For information on distributions subject to section 737, see the instructions for box 19, code B.

[bobvcm]

Thank you for the detailed information.  

[jwsestate]

Thanks very much!

[bldit]

Thanks but....

[bldit]

Thanks but....

[bldit]

Thanks but....

[bldit]

Thanks but....

[des779]

The built in Gail/Loss will have an impact when shares are sold.  No impact on the 2018 return unless shares were sold between October 19th and December 31st.

[gbern]

bobcvn, I have same question.  Hope someone can answer:

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?

[jwsestate]

I have the same question.  I do not see the answer,  has anyone replied?

[gbern]

Got an answer from Energy Transfer Partners:
"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 the 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 built 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 transaction), we are required to attach an informational statement to the K-1".

[boiscro]

In case you were wondering, the amounts reported as the built in gain are based on the fair value of ET units received on the merger date (10/18/2018) -- approx $17.05/unit -- less your closing ETP partner  capital account balance "withdrawal" (subtract any Box 19 distributions included in this amount) per Part II, section L on your K-1.  This ETP withdrawal amount/ending ETP capital account is your adjusted basis in your new ET units.  Continue reporting all ETP K-1 items using the separate schedule provided by ETP and ET in 2018, and ET in future years.  All ETP Suspended losses will be recognized when you sell your ET units.