I plan to remove the line in 1099B sales and simply add in the K-1 section to remove duplicate sale.
don't do this. the 1099-B sale proceeds are reported to IRS. Through the k-1, it is coded as proceeds not reported to the IRS. so you would likely get a bill from the IRS showing the proceeds, $0 cost and a bill for the additional taxes.
Question is do I simply use the 1099B sale price and K-1 Cost basis from Cost Basis (Purchase Price - Cumulative Adjustments To Basis) which is the Form 8949 Column E?
The reason I ask is that the purchase price/initial basis amount is higher than the 1099B which reduces my gains. A little worried about this.
Is this correct? What constitutes the increase in cost basis?
assuming what you sold was a publicly traded partnership here's what I suggest
Publicly Traded partnership/Master Limited partnership reporting k-1 and 8949
as part of the K-1 package, you should have received a supplemental sales schedule. please review it since you need it to compute your tax basis
Enter the k-1 info
Check the PTP box
If total disposition procede as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of the entire interest
Use QuickZoom to get to the following section
On the k-1 disposition section for sales price use the ordinary income from the supplemental sales schedule if any is reported (sometimes you’ll see a column with the “751” or the words ”gain subject to recapture as ordinary income”
Cost is zero
Ordinary income is the sales price.
This info flows to form 4797 line 10 and is taxed as ordinary income.
Now for the 8949.
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.
The correct tax basis is:
What you paid originally, should be the same as what is on 8949,
Then there is a column on the sales schedule that says cumulative adjustment to basis. If it’s positive add it to the original cost. If it’s negative subtract the amount
Finally, add the amount of ordinary income reported above.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20Z1. That number should be added to the ordinary income above for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but the you lose out on a tax deduction = 20% of this amount.
