nexchap, thank you for this work. I have spent hours and hours reviewing these MLP threads and yours has been helpful. I have a rather stupid question, but was hoping you can help. I followed your initial post, and I have a 2020 initial purchase of an MLP, and several partial sales of the same. I entered $0 for proceeds, and entered the ordinary gain (let's say $1,000) and the exact inverse (-$1,000) in partnership basis. I went to the 1099B I downloaded, and yes, it was one where the basis is not reported, so I changed it to the correct basis following my review of the sales lots and calculations. All good. Box 1 of the K-1 was an ordinary business loss loss. Not sure that matters.
What this is doing is putting the capital gain on my 8949, and putting $1,000 on Schedule E under column (g) which is "Passive loss allowed" and putting $1,000 on Form 4797 Line 10 as an ordinary gain.
What doesn't make sense to me here is why Schedule E is showing a passive loss equal to the ordinary gain on Form 4797. In other words, how does the sale of an asset and reduction of basis cause a passive loss equal to that amount? Doesn't this entirely offset the gain? So what's the point of putting the negative amount impacting basis in the interview in TT?
Bottom line, I know very little about MLPs and I'm not a tax guy, so just wondering if this is the correct outcome on the forms. Essentially, I'm reporting the capital gain on 8949, I'm reporting the ordinary gain on 4797. But the passive loss on Schedule E (which says the IRS compares K1 information to the Schedule E for a match) doesn't seem to make sense to me.
I'm assuming this is a really simple answer, and I apologize in advance if I've missed the boat. TT really needs to make this easier.
