Hi, @nexchap. I’m attempting to follow your excellent instructions here, but I have hit a bit of a snag. I’m filing a final return for a deceased taxpayer (my father) who owned an MLP that got bought out last year, just after his death. There should be a step up in basis, since all assets reverted to his trust at death, but due to inopportune timing, the K-1 was issued in his name and SSN, and therefore does not reflect this. There’s also no sales schedule provided that tells me what the adjusted basis should be, and he never kept track of it either. So to avoid dealing with this, I’m hoping I can just use the market value on the date of death as my cost basis and go from there. But this will create a discrepancy with what the K-1 says, since it lists an ordinary Section 751 gain that’s larger than what the entire gain would be under stepped-up basis rules. Is this a problem I should be concerned with?
My thought was to just take the stepped-up basis and call the entire difference an ordinary gain, but I’ll defer to your recommendation.
Separately, I also have a final K-1 for some other shares in a different MLP that converted to a C-corp. The newly-issued shares were a like-for-like exchange with the old ones, with the same cost basis. However, my final K-1 also shows that same amount in Box 19C - other property. Should I enter this box into Turbotax? I don’t know what it will do with it. Will it try to classify it as taxable income? Obviously, it shouldn’t be.
Thanks a lot.
