@chenxud It was a full disposition on 4/8/21, but you'll need the K-1 preparer to split the K-1. You'll want one for 1/1/21 to 4/8/21, when you did a full disposition. You'll enter all the info into TT and report the sale. This will allow all the suspended losses to be released.
Then you'll have a 2nd K-1, for July to Dec, which you'll also enter into TT. To keep track of which is which, you can call the first K-1 'oldET' and the second one 'newET'.
As to why the recapture is so high, look at the losses being reported in box 1 of the K-1. In reality, these MLPs typically make a profit. But they never report one, because they also report massive amounts of depreciation (which reduces profit). That depreciation is what comes back as 'recapture'.
As an example (and these numbers are all made up), supposed ET had a pipeline and you're share was worth $100,000. Over 3 years they depreciate it to $0. That's $100,000 of losses they report to you, which are suspended until you sell. So you sell, but ET at that point has to say "You know that pipeline? It's not really worth $0. In fact, its pretty much worth $100,000". Now, if that was the end of the story, you'd get a $100,000 loss on Sched E (taxed at Ordinary rates) and pay an extra $100,000 in Cap Gain (taxed at preferential rates), and the IRS would be unhappy. So they require that the $100,000 show up as 'recapture', taxed at ordinary rates. So yes, it is a big number, but you have to compare it to the losses they've reported, which are usually just about as big.
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**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!
