When you sell, your total gain is taxed at 2 different rates: part of it at the cap gain/loss rate, and part of it at the 'ordinary' rate. So the amount that showed up on 4797 is the amount being taxed at the 'ordinary' rate (which is why its referred to as 'ordinary' gains). There's no double counting if you've adjusted the cost on the 1099-B to reduce your Cap Gain by this Ordinary amount.
Example: Sale $100, Cost Basis from K-1 $30 gives a total profit of $70.
- If Ord Gain is $50, then you want a Cap Gain of $20.
- So you'd adjust your 1099-B cost basis to $80 ($30+$50), resulting in a Cap Gain of $20
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**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!
