I don't know purchase price, only cost basis. I sold the entire position and read I have to report cost basis to IRS but if it's being reported on 1099 B then entering it in K1 section of TT would be double counting.
HOPE THIS HELPS
MLP and PTP 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 total disposition proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of entire interest
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” or similar wording. This info comes from the supplemental sales schedule that should have been provided. It's also now on the k-1 box 20AB - no 20AB, no ordinary income column then then sales price is zero. The numbers I’m using represent the line numbers in forms mode (desktop only)
5. Sales Price = line 20AB (1065 k1)
6. Selling expenses = 0
7. Basis = 0
8. Gain is computed and should be same as the sales price.
9. Ordinary gain = enter same as sales price
This amount flows to form 4797 line 10 and is taxed as ordinary income. This step is necessary, so any suspended passive losses are now allowed.
10,11,12 should be blank
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. 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, if any.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20AB. 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.
Based on the information in this string:
your total gain is
4690 - (3939-1652)=2403 sales price less (purchase price reduced by adjustments to basis)
that's broken into two parts capital and ordinary
capital is 585 + ordinary is 1818 sum 2403 which magically is your total gain on sale
adjustments to basis are the sum/net of the following:
items of income - increases basis
items of losses and expenses - decreases basis
distributions - decrease basis
you could go through every k-1 over the years to see if the 1652 matches up but be wary certain lines on the k-1 don't affect basis because they are subcategories of other lines
HOPE THIS HELPS
MLP and PTP 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 total disposition proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of entire interest
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” or similar wording. This info comes from the supplemental sales schedule that should have been provided. It's also now on the k-1 box 20AB - no 20AB, no ordinary income column then then sales price is zero. The numbers I’m using represent the line numbers in forms mode (desktop only)
5. Sales Price = line 20AB (1065 k1)
6. Selling expenses = 0
7. Basis = 0
8. Gain is computed and should be same as the sales price.
9. Ordinary gain = enter same as sales price
This amount flows to form 4797 line 10 and is taxed as ordinary income. This step is necessary, so any suspended passive losses are now allowed.
10,11,12 should be blank
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. 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, if any.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20AB. 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.
Thank you so much!!
I see the calculations in the directions but don't understand what to input into Turbo Tax...
From brokerage
Cost basis (which is wrong) $3939
Proceeds $4690
Net gain $751
the question is does you state allow bonus depreciation according to federal tax laws? if it does ignore columns 10 and 11.
if it does not did you adjust the income/loss reported for the state for the unallowable depreciation for each year of ownership?
if you did then you have to take into account column 10 and 11 for the state amount (not federal) of capital gain/loss on sale and column 11 for (not for federal) the ordinary gain portion. If you need to do this, you will have to get help from other as to how to enter in Turbotax
@Mike9241
Hi Mike,
Can you verify I inputted the correct partnership basis? I don't understand why I'm seeing a gain and a loss on schedule D.
wrong
basis
+3939 purchase price
-1652 adjustments to basis
+1818 751/ordinary gain
=4105 total basis for capital gain/loss
*4690 salrs price
=585 capital gain
line10 shouldn't be there since that says sales price and tax basis not reported to the iRS but it was reported so the type should be e
it would seem you enter the 1818 in the wrong place that only goes on the sale schedule for the k-1
only the 1818 goes on the k-1 sales schedule
since the sale is ewported on the 1099-B you have apparently reported the sale twice
the 8949 only shows the capital gain portion of sale type e since the proceeds are on the 1099-B
looking at what you did you reported everthing on the k-1 sales schedule which is wrong
only the ordinary gain is entered as the sales price with 0 as tax basis
so line 9 type e form 1099-B should show sales price 4690
you change the reported basis from that shown on the 1099-B from 3939 to 4105
You clearly know what you are doing. Thank your time and patience!
Can you please tell me what do I enter in the Turbo Tax Wizard screen? Each input results in an entry on the forms.
Can you tell me based on my schedules what entries I should have on the 8949 for this sale? I have two: 1) Type E for the 751 gain with the incorrect basis (which I can't change because it came from the 1099B) AND 2) whatever the Turbo Tax K1 screen creates. When I inputted the $1818 in the ordinary income field and zero as the basis (I believe those were your instructions) Turbo Tax created a Type F entry on 8949 for the sale with a -1703 loss. Is that right? or at least close????
Sales price field —> column d
Partnership basis —> column e
Ordinary income --> ?
I use desktop which does not have the wizard.
it's been reported by the broker. what's wrong is that the cost basis is wrong. it needs to be adjusted based on the calculation from supplemental sales schedule you got from EPD - only the capital gain - sales price and adjusted basis gets reported on the 8949. if held long-term the code should be E sales proceeds but not cost reported to IRS or Code B if a short term sale. the 8949/schedule D reporting is completely separate from the ordinary income reporting. if you report the sale through the k-1 sales schedule you will in fact being reporting twice if you entered the broker's report either through direct entry or import
only the ordinary income portion gets reported through the k-1 sales schedule and only there
to get back click on the wages and income tab
scroll down to business items and select "update" for the line that says schedules k-1
click tes when it asks about schedules k-1/Q
on the line that says partnerships select update
you'll be asked questions about 2022 k-1 for EPD select yes
select work on it now
select yes for review info
continue on
mark complete disposition and continue
mark sold partnership interest and continue
enter dates and continue
you are now on the sale info page
this is where the ordinary income and only the ordinary income gets entered
sales price = ordinary income
basis = 0
ordinary gain same as sales price
your done with entering ordinary income
for capital gain
again select wages and income tab
i choose what to work on
scroll down to investment income
on the line that says stocks etc select update
continue no need to update
select the broker and then edit
continue on
find the listing for EPD and select edit
on 1e change the cost or basis to what was calculated in the sales schedule
for sale category select the letter that matches the section the broker used most likely B or E
your done
@Mike9241
I think I fixed it so the capital gain is being captured once w/correct basis and the gain subject to recapture displays on my 1040 !!!
Here is what changed:
1. The EPD sale is showing ONLY ONCE on the 8949 with the $4105 basis (1099 basis - **bleep** adjustment + ordinary income) which reduced my capital gain to $585
2. The gain subject to capture as ordinary income is displaying on line 8 of 1040.
Did I (finally) get it right?
Btw, can I patreon you some beer money (or a steak dinner), you really went above and beyond....
looks like you got it right. since it only shows once on 8949 with correct gain and ordinary gain is properly flowing to line 8 of 1040. actually it first flows to schedule 1 and the net of schedule 1 flows to line 8 of the 1040 thanks, but no thanks for your reward offer. making users happy to use Turbotax is what we do. However, you might want to think twice about investing in other PTPs. the k-1s can be a lot more complex not to mention the sales reporting but now you know how to enter sales info, so that only leaves the k-1 info
Last question:
If I only made a gain of $585 on the sale, why do I have to claim $1800 as ordinary income? I know for sure I didn't make a profit of more than $900 on the sale...I could understand taxing part of my gain as ordinary income but I'm paying capital gains on the entire profit and being taxed on $1800 I never made...
Dazed and confused
Based on the information in this string:
your total gain is
4690 - (3939-1652)=2403 sales price less (purchase price reduced by adjustments to basis)
that's broken into two parts capital and ordinary
capital is 585 + ordinary is 1818 sum 2403 which magically is your total gain on sale
adjustments to basis are the sum/net of the following:
items of income - increases basis
items of losses and expenses - decreases basis
distributions - decrease basis
you could go through every k-1 over the years to see if the 1652 matches up but be wary certain lines on the k-1 don't affect basis because they are subcategories of other lines
I sold 2 PTP stock this year NS & ET.
Is it correct?
I claim "non passive loss allowed" on Schedule E
Add all negative numbers on Schedule K-1 "Line 1 & Line 2" in 2 years
to offsets my gains from (sale stock + distribution).
NS turn out to be equally even. (Do not have Excess Business Interest Expense).
ET is $300 dollar more than I actuated get.
(Excess Business Interest Expense last year $419.00)
Thanks for your summary of how to input PTP sales in TT. I have only two questions:
1. Entering either a cost basis change in Form 8949 Column E or as a gain adjustment in column G causes TT to throw an error check and disallows electronic submission. Math gives the same answer either way, but TT says that either way is an error. Is this the way it is supposed to be?? I don't remember this happening in prior years.
2. "Some other things. Look at lines 20AB. 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." Not sure what this means. Yes, line 20AB on the K-1 is equal to the ordinary gain on the K-1 sales schedule. Where do I add this?? There is a QBI schedule included in TT showing historical QBI's. Any help appreciated.
Take me couple days to find how to it correctly.
For 8849 correct Cost Basic + Cumulate Adjustment to Basic (mostly negative number) + Ordinary Income
That the cost basic use for 1099-B
You $10,000.00 when purchase the stock and sold for $15,000.00
K1 Cumulate Adjustment to Basic -($3000.00) Ordinary Income or gain $5,000.00
AMTGAIN/LOSSADJUSTMENT -($300)
$10,000 + -($3,000) + $5,000 = $12,000
When enter 1099 -B 1e $12,000.00
Select "cost basic incorrect or missing on my 1099-B
K -1 Enter Sale Information.
Sale price $0
Partner basic -($5000) ATM Gain/loss $300
Ordinary gain $5000 ATM Gain/loss -($300)
It should do it.
and enter all the info for K-1
When get to Describe Partnership
Select passive activity loss from last year
All my investment at risk.
Go back to all the previous K1 - from PTP you sale add all number from line 1 and enter it.
It should balance the gain sale stock and received capital gain from PTP, might be a little different.
Hope this help. good luck.
If you have ET (Energy Transfer) check the second page of K-1 for correct amount for some Line 1, 2, 10, 17A, 17B, 20 ect.......
Because K-1 included USAC and SUN.
Thanks for the tip. I have processed PTP sales in the past, so I had a pretty good idea as to how to proceed. My problem was how to enter the cumulative cost basis adjustment onto the capital gains calculations.
Here is how I proceeded:
In the past, I had adjusted the 8949 as recommended by the K-1 sales Sheet. It had worked OK. This year, these adjustments (over rides) were flagged by TT as errors and stopped use of E-File. Something may have changed in the system??
After looking around a bit, and as you suggested adjusting the 1099-B transaction, I found that you can’t update the 1099-B directly (mine was electronically downloaded weeks earlier and had a boatload of transactions), but you can go to the Capital Asset Worksheet attached to the 1099-B, and then locate the transaction in question. A Double Click (see the notes on the Capital Asset Worksheet) on the transaction, and an “adjustment window” opens, allowing you to add an adjustment amount, a code for the adjustment (I used “B”), and an explanation. Perfect!! This transfers all the information to the 8949 as required, and no error flags!! For some reason, also had to click the Multiple transaction box for the changes to take effect, but that’s ok, I summarized several transactions and entered the entire adjustment on one transaction.
One thing to remember is the K-1Worksheet says to enter the cost basis on the 8949, but you are actually entering a Gain adjustment in TT. No revenues or cost basis numbers in the 1099, etc. change. There is simply a Gain adjustment included in the adjustment field. The sign of the gain adjustment will be the opposite of the Cost adjustment on the K-1.
One other thing to look out for. I found that the K-1 Cost basis and the 1099-B cost Basis prior to any adjustments are not always equal!!! I contacted TaxPackageSupport and found that they use an average cost basis for unit sales and spread a sale over all units in the account. Your broker could use FIFO, LIFO or some other method, but probably not an average basis. So if you had previously sold shares, the two bases will be forever different. I had this problem on one set of transactions. Others came out OK – The two cost bases were identical … 1099 - B = K-1 Sales Sheet. I believe the K-1 basis is the correct one (the 1099-B shows the date in section E – not reported to the IRS, since they are not necessarily correct), so you may need to add this adjustment to the K-1 sales Sheet adjustment to get the correct total adjustment, since the 1099-B is starting with the wrong cost. As before, check the sign of what you are adjusting - you are adjusting the gain to account for the different cost basis starting point.
Whew!! It does work, but the instructions in TT are very obtuse; it may be good tax advice, but rarely address how to do what is needed.
Thanks again for the tip on adjusting the 1099 – that’s what steered me in that direction.
if it's a PTP Publicly traded partnership) box D of part I will be checked. if you're asking about Turbotax what version are you using. for online you'll need premier version for desktop any will do.
under wages & income, scroll down to business items. click on "start" or "update" on the line that says schedules K-1.
click "start" or "update" on the line that sys "Partnerships/ LLCs)
if the partnership name isn't there click on "add/add another" or "update"
enter name, ID #, and address if needed click "continue"
on next page choose "the type of partner" if it's owned by a retirement plan nothing should be enter on your 1040. the trustee may have to file form 990T so will need the k-1. if this is not the case click "continue"
next page for a PTP check the LLC member box and the click "continue"
next page check "domestic" of "foreign" and click "continue"
continue on to following pages (for example nothing needs to be enter on the percentage share page, liabilities page. or capital account page because they're not used by Turbotax
you eventually arrive at the "describe the partnership". The first line should be checked if it's a PTP.
do you know how to enter any ordinary gain on disposition, if any, that' would be reported in box 20AB of k-1 and on the supplemental sales schedule and how to enter the correct tax basis on form8949 (it's not on the broker's statement)
@Mike9241 Thank you for the detailed instructions. Do they still apply to TT 2024?
Also, I am at the "Now for the 8949" section of your instructions. I am not sure where to enter the info. In TT, am I manually changing what was imported from the Schwab Brokerage file, and then check the box that says "The cost basis is incorrect or missing on my 1099-B"?
My K-1 info:
-Sales price and ordinary gain is $2111.
- Sales schedule purchase price = $6660 (which is the same as what is on the 1099-B)
- Sales schedule Cumulative Adjustments to Basis = $2010.
Form 1099- B info:
1d - Proceeds: $7729.75
1e - Cost Basis: $6660
Realized Gain: 1069.75
Thank goodness I sold this. It is such a hassle at tax time.
Yes, you need to report your adjusted basis, not what the broker reported.
Per @Mike9241:
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. 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, if any.
The result is your corrected cost basis for form 8949.
Note that the process posted for tax year 2022 is still valid for tax year 2024.
@schultzdonna
only the $2111 gets reported in the sale section of the K-1. do not report the 1099B here you will create issues for yourself
Schwab should have coded them as type B (short-term) or E (long-term) uncovered which simply means Scwab did not report the cost basis to the IRS
if the cumulative adjustment to basis is a positive 2010
then your tax basis for schedule D/8949 based on what you provided 6660 + 2010 +2111. If my math is correct that's 10181 so a sales price of 7730 produces a capital loss 2451
if the 2010 is negative tax basis is 6161 for a capital gain of 1569