the k-1 is entered as is in your 1040 though most items are not used. for Part III the only numbers that need to be entered would be lines 5 and 13H (assuming all other lines are blank or 0 except for line 19). The interest income on line 5 is taxable and increases your tax basis in that partnership. 13H is investment interest expense which will only benefit you if you itemize your deductions for tax purposes. regardless it reduces your tax basis. your tax basis is further reduced by the distributions on line 19. while you can enter that line in Turbotax it is not used. distributions are not a sale. so you do not report them as a sale. the only time distributions would have a tax impact other than reducing basis is if they should exceed your tax basis. in which case your ending capital account will be negative. currently, I believe that the ending capital account in part L is required to be reported on the tax basis.
as for parts I and II on the k-1 only the following need to be entered. the rest is for your information or amusement.
A, the Partner Is Box (fills in E, F, and H1), G, I, and answer the at-risk question which should be checked all on your K-1.
a PTP is like owning stock. you can buy and sell as often as you like through a brokerage. you get a sales schedule because you actually sold some or all of the units. a sales schedule is not produced for the distributions it makes. Like with a private partnership they are not sales but reduce your basis. that's why the 1099-B for the sales does not reflect the proper tax basis. you must use the sales schedule to determine that.
