the instructions (i used desktop) provided by Turbotax are wrong/incomplete
"Note: if this is a full or partial disposition of a publicly traded partnership (PTP) or master limited partnership (MLP) that was reported to you on a Form 1099-B enter a sales price of zero on line 5 and a basis of zero on line 7 below. Enter the 1099-B transaction on Schedule D, checking the appropriate “Reported on 1099-B” box A or B. See help."
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Certain MLPs/PTPs carry no 751 assets like investment partnerships. therefore, the 751 income will be zero. so the above would be correct in those cases. what isn't stated is how and where to report any 751 income that is reported on the supplemental schedule and box 20AB of the k-1. reporting the 751 income, which is always ordinary income, through this section of the k-1 is the most practical place to report it. it carries this to the 4797 line 10. The broker does not have your tax basis because they don't get it and therefore don't adjust for the activity. What they report as cost is what you paid to purchase it. Every 1099-B that I have ever seen reporting the sale uses type B or E which means tax basis is not reported to the IRS and what is shown as tax basis agrees with the supplemental schedule ($ round excepted and in rare cases brokerage fees are not included) column that reports purchase amount/initial tax basis. some supplemental schedules will give you the total tax basis including the 751 amount others give the adjusted tax basis before the 751 amount to which you must add the 751 amount (the 751 increasing the partnership income increases the tax basis). for you add columns 6 and 7 as tax basis on schedule D/8949
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yep, cost is the same as partnership basis. sorry, I didn't realize they change the wording. there are two elements to selling a partnership interest 1) ordinary income i.e. the 751 gain if any and 2) the capital gain or loss. The 751 part has a zero basis
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you can not report the complete sales detail through the k-1. the type would be C or F - neither proceeds nor tax basis reported to IRS which even if you were to delete the sale form the 8949 broker report would result in a letter from the IRS because what you will show as reported proceeds will be less that what the IRS broker report shows.
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yes QBI is the same or almost the same) as the cumulative k-1 line 1,2 and 3 income/loss reported on the K-1s since 2018. with PTPs/MLPs ordinary losses (lines 1 thru 3 off k-1) are not deductible. they are suspended until there's either income from the same PTP/MLP or complete disposition of that security. The same applies to the QBI. if you properly entered the QBI info Turbotax carries it forward. with positive QBI from a PTP, you get a deduction from taxable income of 20% of the QBI amount from PTPs (any non PTP QBI income deduction can be limited). it shows up on form 8995 and on line 13 of the 1040. it can not go negative.
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that -999 is losses that haven't been deducted on your return because of the tax laws. upon complete disposition of your partnership interest, it is allowed but as a twist, it is treated as non-passive. the supplemental schedule has already accounted for that loss so you do not adjust your tax basis for it.
