I need to enter an adjusted cost basis from a K-1 from a Partnership ETF I received. I can't get to the right screen from the "Stocks, Mutual Funds..." section.

[userID2493]

I am amending my return because I received a K-1 from an investment into USO. Whenever I click the Edit/Add button for this section, it takes me to the investment sales section and when I click Edit for the brokerage entry, it takes me right to the sales entries. This doesn't see like the right place to enter the adjusted cost basis from the K-1 sales schedule. I tried canceling the amendment to start over but it remembers all the info when I try to amend it again.

[Mike9241]

you sold the investment. the 1099-B shows your original cost which is no longer valid. so from the sales schedule provided by with the k-1 you need to change the cost that was imported or entered originally to the cost calculated from the sales schedule. 

I recommend not using the k-1 to report all the sale info. (the sales proceeds will end up in the wrong part of form 8949 - as type c - transaction not reported to IRS so the IRS computers might not match the 1099-B reported proceeds with those reported on schedule d - types a,b,d, and e causing you to get a notice and having to explain)  My way only then the sales info you enter on the k-1 sales schedule is just any ordinary income reported on the sales schedule on both the proceeds line and the ordinary income line.  cost is $0. this will flow the ordinary income to form 4797 line 10 

[userID2493]

Thanks for responding. I found this reply on another thread but I can't get to it because I must have bypassed the interview already: "

The correct place to enter a cost basis adjustment is on a different screen than the one you are using.

In the "Tell us about your Box __ sales from your 1099-B" screen, you need to check "This sale involves an employee stock plan (including ESPP) or another uncommon situation."

The next two screens will allow you to enter the correct adjusted cost basis (not an adjustment to the reported basis)."

[userID2493]

Ok, I went in to the actual transaction in "Stocks, Mutual Funds, Bonds, Other" and clicked the "The cost basis is incorrect or missing on my 1099-B" check box. Then I was able to enter the cost basis from the "2020 Sales Schedule" I got from USO in the box. This cost basis is higher than the original basis so the sale summary in TT now shows a negative adjustment and a new loss for the sale.

This only partially offsets the Line 11C income from the K-1. I'm hoping in 2021, there will be another basis adjustment to offset the rest of the losses I had in 2020 on this investment even though in 2021, the investment finally turned positive.

I hope I am doing this correctly. Other things I've read online say the income in Line 11C should be added to the cost basis. However, I didn't sell all of my shares yet so that's why I'm hoping the next K-1 will have the remainder accounted for.

This is from https://www.uscfinvestments.com/k1-information: 

"Your tax basis is generally the original amount paid for the Shares adjusted as follows:

• Increased by the allocable share of income and gain reported to you on the Schedule K-1"

[MGuercini]

In March 2020 I bought 600 shares of USO Fund for $33,000. I sold them recently for $48,000.

I am reposting this question thinking that I was not clear the 1st time. I rounded the figures to make it easier to follow my situation.

I received Schedule K-1 for tax years 2020 and 2021:

Line 11c, Other income (loss) has -$13,000 for 2020 and +$13,000 for 2021.

I like to know what is my tax liability in concept without going through actual calculations for each of tax years 2020, 2021 and 2022.

I am getting conflicting answers from different people. Someone in this forum says that the loss in 2020 is ignored, but the gain in 2021 is taxable (even without selling the shares in 2021). A CPA tells me that the loss in 2020 must be carried over to 2021 to cancel the gain in 2021. And tax have to be paid in 2022 on the gain due to sale (on $15,000). I would like to be sure what is the CORRECT answer.

Lesson learned: Never buy USO or any other Partnership Fund, just stick to "real" ETFs!

[RobertB4444]

@MGuercini  Box 11c is used to report section 1256 gains and losses.  Section 1256 contracts are named for the IRS code section that refers to them and they are investments that show gains and losses based on underlying value - not on whether you sold them or not.

Here is a good TurboTax article on 1256 contracts.

The tax treatment for the loss and gain that you have depends somewhat on what the underlying investment is but it sounds like your CPA friend has the right idea - rolling that 13K loss forward to wipe out the 13K gain seems like your best plan.  Then the 15K gain for the sale is just taxed as long term capital gains.