Nexchap, thank you for being here. I don't know why TT can't make these things automatic...they should pay you;)
I have filled out my TT interview forms as you suggested but just had a philosophical question because something doesn't feel right. I used your formula for fixing my 1099-B to get my accurate capital gain for the sale of my MLP. Took Sales proceeds (from broker record) minus cost basis (box 6 on MLP sales schedule) minus ordinary income (box 7 on MLP sales schedule - gain subject to recapture as ordinary income). Is that correct?
My question is, on my sale had a $8K apparent capital gain based simply on purchase price and selling price. But after figuring in the revised cost basis, which reflected payment distributions received from the MLP that lowered my cost basis, that capital gain rose to $26k. However, when I then subtract the "gain subject to recapture as ordinary income," my final capital gain for tax purposes is only about $2k. That's what I don't get...I sold it for 8K more than I paid for it, and received thousands in dividends not previously taxed, yet my taxable capital gain is only 2K? How can that be right?
I guess my question is, why is the "gain subject to recapture as ordinary income" subtracted in order to figure capital gain for tax purpose? I'm just missing the rationale that appears to enable me to hide thousands in untaxed income I received. It just seems philosophically to me like my capital gain should be sales proceeds minus my adjusted cost basis, full stop?
Many thanks!
