Solved: Merrill Lynch's statement might be confusing to yo...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
Hardway
Level 2

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

The statement also says Investors in Limited Partnerships will receive information regarding these investments via Form 1065, Schedule K-1 directly from the partnership under separate
cover. Certain hedge fund Limited Partnerships may not be in a position to distribute K-1s prior to April 15. If you are an investor in Limited Partnerships, you
may want to obtain an extension for filing your federal, state and local income tax returns.Information in the Other Distributions and Charges section is provided to you in order to assist in tax preparation. We do not report this information to the IRS. Information in
this section may have an impact on your Alternative Minimum Tax (AMT) calculation. Consult your Tax Advisor for more details.
1 Best answer

Accepted Solutions
TomYoung
Level 12

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

Merrill Lynch's statement might be confusing to you because you didn't understand what you were buying when you bought Blackstone. 

 

Blackstone is not a "corporation" it's a "limited partnership" and by buying into Blackstone you have become a limited partner.  Partnerships are "pass through" entities.  What that means is that Blackstone doesn't pay income tax.  Instead it "passes through" to its partners income, deductions, credits, etc. so that the partners can report these activities on their own Form 1040 income tax returns.  That's the function of the Schedule K-1; to pass this information along to you.

 

When you get the Schedule K-1 you'll enter that information using TurboTax's "Schedule K-1" interview and TurboTax will scatter this information around the various Forms and Schedules that comprise your income tax return.  This is all independent of receiving any cash, or not receiving cash, from the partnership.  In fact the typical distribution of cash out of the partnership to its partners is treated as a reduction in each partner's basis in the partnership, not as an "income" event.

 

One issue that many "partners" don't understand until they go to sell their partnership units is that the activity passed through to them affects their original "purchase price" and needs to be taken into account when it comes time to calculate gain or loss on sale.  There are other possible ramifications too that add to the complexity of investing in a limited partnership.

 

So you do need to wait until you receive that Schedule K-1 and have that Schedule K-1 entered into your income tax return before you can consider your income tax return "final."  You might want to either extend your filing date past 4/1/2017 - though I expect you probably will get your Schedule K-1 in time - or filing now and then amending later.

 

Yes, you will get a Schedule K-1 and No, you shouldn't report the cash as an ordinary dividend.

 

Tom Young

View solution in original post

5 Replies
ChristinaS
New Member

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

So, did you get the K1 yet? What's your specific question please?
Hardway
Level 2

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

I have not received K1 yet and I doubt Blackstone will issue a K1 for a person who bought only dozen shares. So should I report this as ordinary dividend?
ChristinaS
New Member

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

You should expect a K1. A lot of these big LPs/ MLPs issue taxpayers K1s with incredibly small figures. You get one if you own or owned an interest, however small. Your return would show any distributed share of income/ loss, and the K1 could have a lot more info on it than dividends. In fact, many people find the input of these MLP k1s to be quite onerous.
Some of it may involve dividends, but the K1 is bound to be a lot more involved than simply showing dividends.
ChristinaS
New Member

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

(by distributed, I didn't mean to imply that you literally got that amount of money)
TomYoung
Level 12

I bought and sold some Blackstone stock through Merrill Edge last year and in the secition of it2016 OTHER DISTRIBUTIONS AND CHARGES from the statement provided by Merrill Lynch, it says BLACKSTONE GROUP LP issued dividend which is limited partnership inc

Merrill Lynch's statement might be confusing to you because you didn't understand what you were buying when you bought Blackstone. 

 

Blackstone is not a "corporation" it's a "limited partnership" and by buying into Blackstone you have become a limited partner.  Partnerships are "pass through" entities.  What that means is that Blackstone doesn't pay income tax.  Instead it "passes through" to its partners income, deductions, credits, etc. so that the partners can report these activities on their own Form 1040 income tax returns.  That's the function of the Schedule K-1; to pass this information along to you.

 

When you get the Schedule K-1 you'll enter that information using TurboTax's "Schedule K-1" interview and TurboTax will scatter this information around the various Forms and Schedules that comprise your income tax return.  This is all independent of receiving any cash, or not receiving cash, from the partnership.  In fact the typical distribution of cash out of the partnership to its partners is treated as a reduction in each partner's basis in the partnership, not as an "income" event.

 

One issue that many "partners" don't understand until they go to sell their partnership units is that the activity passed through to them affects their original "purchase price" and needs to be taken into account when it comes time to calculate gain or loss on sale.  There are other possible ramifications too that add to the complexity of investing in a limited partnership.

 

So you do need to wait until you receive that Schedule K-1 and have that Schedule K-1 entered into your income tax return before you can consider your income tax return "final."  You might want to either extend your filing date past 4/1/2017 - though I expect you probably will get your Schedule K-1 in time - or filing now and then amending later.

 

Yes, you will get a Schedule K-1 and No, you shouldn't report the cash as an ordinary dividend.

 

Tom Young

View solution in original post

Dynamic AdsDynamic Ads
v
Privacy Settings