Hi,
I 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?
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.
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.
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.
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.
So getting confused here with whats the right way.
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
I am having the same problem as the original poster. I sold three MLPs during 2023 and they are all showing up twice on form 8949. Is the advice on this post still good for tax year 2023? If I understand this correctly, the sale reported on the 1099-B needs to be adjusted and I only need to adjust the cost basis so that it equals the proceeds.
Do I only need to make these adjustments on the 1099-B, and I don't need to touch the K-1s at all?