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sujith1217
Level 2

Received 1099-B and K-1 for the same sale, results in double tax

Hi,

 

received both 1099-B and K-1 for the same PTP stock sale. I just Imported 1099-B from E-trade, which includes the PTP stock data and then also entered the Schedule K-1 data as per the form. When doing the final review of all forms,  noticed 8949 showing two entries for the same sale(double tax for the same sale).

 

One with BOX B Checked

One with Box C checked

 

Can someone guide me on how to avoid double tax in this scenario?

1 Best answer

Accepted Solutions
DavidD66
Expert Alumni

Received 1099-B and K-1 for the same sale, results in double tax

The broker reports the sale as if the investment was not a PTP.  In order to prevent the double taxation, the sale reported on the 1099-B needs to be adjusted.  I recommend you adjust the cost basis so that it equals the proceeds.  There will be no gain or loss on that transaction, but the reported amounts will agree with amounts reported to IRS. 

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4 Replies
Mike9241
Level 15

Received 1099-B and K-1 for the same sale, results in double tax

there isn't a double taxation.  the 1099-B does not have the correct tax basis. that comes from the sales schedule the PTP would have provided as part of the K-1.  go through the sales schedule carefully because any ordinary income that needs to be reported adds to your tax basis. 

an example: numbers refer to column number from a typical sales schedule

1) unit sold

2) sale date (purchase date comes from 1099-B)

3) sales proceeds (from 1099-B)

4) purchase price

5) cumulative adjustments to tax basis

6) cost basis (should be the same as tax basis but if you inherited the PTP or acquired it other than through a direct purchase it tax basis could be something else) this should be column4 + column 5

7) gain subject to recapture as ordinary income. this is what gets entered on the PTP k-1 sales schedule as the sales price and then needs to be entered in the box for ordinary income.  cost is 0 if you don't do the sales section of the k-1 any suspended PTP losses will not be allowed. you'll know you made the correct entries if this amount shows up on form 4797 line 10

 your tax basis is column 6 + 7 this is what goes on form 1099-B - the capital gain sales schedule

 

for some PTP's it's possible that there is no column 7 or the amount is 0. you still need to enter the sales info  in the k-1 sales page for this (just use 0 as sales price) so any suspended losses are allowed

 

there may be additional columns for:

the alternative minimum tax (AMT) adjustment which will produce a different capital gain for AMT purposes

% long term or short term (the capital gain/loss amount)

depreciation adjustments for nonconforming states.

 

you'll have to deal with these columns yourself because it depends on what you entered from the k-1's you received in past years for this PTP.

 

finally, there may be a state reporting page. can't say for sure but most likely this can be ignored unless you owned many shares of the PTP - your income for the state  - other than your resident state is probably below the filing threshold for most states.   if required to file state returns you could be dealing with 15 states or more. 

DavidD66
Expert Alumni

Received 1099-B and K-1 for the same sale, results in double tax

The broker reports the sale as if the investment was not a PTP.  In order to prevent the double taxation, the sale reported on the 1099-B needs to be adjusted.  I recommend you adjust the cost basis so that it equals the proceeds.  There will be no gain or loss on that transaction, but the reported amounts will agree with amounts reported to IRS. 

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sujith1217
Level 2

Received 1099-B and K-1 for the same sale, results in double tax

Thanks for the info. But while going through other responses for the same type of question, some tax experts are suggesting to delete or don't enter the 1099B info. at all and just enter K-1 info to avoid duplicate entries. 

 

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/re-final-form-1065-k-...

 

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/i-received-both-1099-...

 

So getting confused here with whats the right way. 

bobp1426
Level 2

Received 1099-B and K-1 for the same sale, results in double tax

Hi sujith1217 - you don't delete the 1099-B info, just adjust the cost basis (not reported to IRS) so you aren't double taxed.  Here is a thread that talks about the steps involved.

 https://ttlc.intuit.com/community/taxes/discussion/re-1099-b-and-k-1-form/01/2191623#M788757

 

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