with the k-1 there should have been a supplemental sales schedule that will provide the info needed to calculate gain or loss on each lot. do not use the cost basis on the 1099-B because that's simply what you paid originally. the broker does not get sufficient info to track the tax basis.
MLP reporting k-1 and 8949
Please follow these instructions. Incorrect entries can result in entering the sale twice or otherwise incorrectly. Also see the sales schedule that was included with the k-1
Enter the k-1 info
Check the PTP box
If you totally disposed of all your holdings in this PTP then proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check that you sold or otherwise disposed of your entire interest
Use QuickZoom to get to the following section (maybe only available on desktop versions) but with 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 sales price.
This info flows to form 4797 line 10 and is taxed 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. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.
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" or something similar. 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.
