Schedule K-1 Issues with MLP (limited partnerships)- Oil and gas

[dbrier2]

How does one  determine which States income tax to file based on the following tax package in a K-1 which I received? No clue on how to file this with multiple states and I am  non-resident in each state. Is there a consolidate form that can be filed instead of filing with each state? Might have to go to a CPA and scrap my turbotax premier this year. I have several MLP with this issue and all have K-3 so I will also need to file an extension since the K-3 aren't  sent out till June. Below is a description of the worksheet sent with actual form1065 K1.  

The page has 12 columns ,not all columns have numbers . Listed below are the ones with numbers.

1. States listed  (approximately 20 states with activity)

2.Ordinary Income /or loss passive activity **       all show  negative numbers

3.Bonus Depreciation**   all negative numbers

9.Gross receipts  ** all positive numbers

11.ATM Depreciation adjustment**   all negative numbers

12. 13K Excess business interest expense.

[AliciaP1]

Yes, I would suggest finding a tax professional in your area to help you as you have a quite complicated tax situation going on here.

[dbrier2]

Pretty much what I thought. Thanks

[Mike9241]

each of those 20 states has different rules for when a return must be filed if they have a personal income tax. to complicate matters different states have different rules for bonus depreciation. due to losses being passive the loss would not be currently deductible   - most likely suspended like for federal tax purposes. the benefit to filing might be you get to use those losses to offset income that could be generated when you sell an MLP it's section 751 recapture which is always ordinary income and can increase the capital loss or reduce the capital gain on sale because it adds to your tax basis which brokers do not track. 

[mlpinvestor]

@Mike9241 @nexchap I have a MLP that was acquired by a competitor last year.  My sales schedule gives two different amounts for "cumulative adjustment to basis," and for "gain subject to recapture as ordinary income" as well.  The second set of numbers is adjusted for bonus depreciation.  The instructions state to “use these amounts if you are filing in a state that does not conform to the federal rules regarding bonus depreciation.”  See table below.

Since I live in a state without state income tax, I’m not sure the relevance of this.  For a federal-only return, which pair of columns should I use (5 and 7, or 10 and 11)?

[Mike9241]

the bonus depreciation state columns are only to be used for state income tax purposes. since you don't have any ignore those columns. Use columns 6 & 7 to figure federal capital gain/loss (this would be true even if you had a state income tax that did not recognize bonus depreciation)

[mlpinvestor]

Thanks for the prompt answer!  That’s what I suspected.

This might not be the best thread for it, but there’s one other thing that doesn’t look right to me.  One of my MLPs had positive ordinary business income last year, rather unusual for a midstream MLP.  This freed up some prior year accumulated passive losses.  What has me confused is the fact that the amounts freed up are different with respect to “regular tax” vs. 199A QBI carryovers.  I don’t understand why this should be.  Specifically, the suspended loss freed up for QBI purposes amounted to $740, which just so happens to be double the $370 of ordinary business income.  What’s going on here?