I have 2 K-1s from ETP (Energy Transfer Partners, LP) and ET (Energy Transfer, LP), in the 2018 merger ET acquired all of ETP common units 1.28 ET for every 1 ETP unit held. Under Section 20 line AH8 is listed the amount of capital account transferred to ET, How do I add or explain this - and where? Also, if my ETP K-1 is the final k-1 would I only check "Partnership discontinued", or do I also check "Partner sold or otherwise disposed of entire interest in the partnership in 2018"?
Technically, ETP wasn't discontinued since it still exists under the ET umbrella, and must still be entered as a standalone K-1 in TT (since ET must be broken out into all there sub-entities). So assuming the ETP FEIN has't changed, you can enter ETP "normally" by just adding the values on the two K-1s.
If the FEIN changed, then you'd only check off "This partnership ended" and "Disposition was not via a sale". This 2nd one is important, because it keeps the passive losses suspended. This answer has a little more info on that: https://ttlc.intuit.com/questions/4726806-how-to-merge-passive-losses-in-mlp-merger
As for the basis transfer, that is for your records and doesn't need to be entered into TT.
- I also own ET, and had 7 different K-1s in TT for the entity. The reason: 1) ET ex box 2, 2) ET box 2, 3) ETP ex box 3 4) ETP box 3, 5) USAC, 6) SUN ex box 2, 7) SUN box 2. You absolutely have to split them this way, because (as the instructions in the ET K-1 package state), passive losses can only be offset by passive gains from the same PTP. If they weren't split, then the tiny amount of positive business income reported for ET would have released losses from USAC. That's not allowed.
- Listing each K-1 as something like "ET (USAC entries)" is a great way to keep track of everything.
- I'm not sure whether its correct to put them all under ET's FEIN, or the one listed by ET on the breakout page. On the one hand, the IRS computer may want to sum all the separate K-1s to make sure they add to the master. That argues for the same FEIN. On the other hand, if the same PTP shows up in multiple places (e.g., suppose SUN is owned by ET, by ABC, and by you separately), you have to be able to combine those 3 different sets of financials. So its a confusing mess. In this case, it won't really matter so if you have a CPA telling you to do it one way, go with that.
Once you've got all your ET entries done, you still have this final K-1 from ETP. Two options here, depending on what you do with the FEINs:
- If you start listing "ET (ETP entries)" under the ET FEIN, then you'd enter your standalone ETP K-1 as a "Final", "Disposition not via a sale". This will leave the losses suspended.
- The easiest way to get those suspended losses over to your new ETP holding (which is where they need to sit) is to wait until next year. Then, when your entering "ET (ETP entries)" again, it will ask about suspended losses from prior year. Here, you'd combine the losses from the two K-1s.
Hope this helps. Its confusing. I'm not sure that even the IRS is clear on the nuances (as the K-1 package says "the application of passive loss limitations to tiered PTPs is not entirely clear.")
I am equally confused on the additional page Energy Transfer (ET) included in the Tax Package for the ETP to ET transfer. It is titled "Built In Gain/Built In (Loss) Statement." It states "On October 19th, 2018 you contributed your ETP units to Energy Transfer LP ("ET") in exchange for ET common units. An asset contribution to a partnership would result in a built in gain or (loss) to be recognized by the partner as the units are disposed. The tax basis reported below is based on information provided to the Partnership by you or your broker, or the amount used to determine your share of allocable gain or loss."..."This statement is provided by the Partnership to report the built in gain or built in (loss) generated by an investor's exchange of property for ET units."
Gives 3 entries: "Fair value of contributed ETP Units" and "Tax Basis of Contributed ETP Units" and "Built in Gain/Loss".
My question: Is this reportable on 2018 taxes or is this to be used when sold in future?
@nexchap Thanks for all your guidance on this, been reading through this and another thread you have which has been really helpful. Basically trying to replicate what you did.
One question though -- what do you mean by box 2? Do you mean the line item 2 in the sub K1 section ("Net Rental Real Estate Income") -- or something else?
FYI - This is a new forum layout. Some posts that have June 2019 dates are really older posts from the old forum that got moved over. So they might be for prior years. When they migrated over the dates got changed to June 2019.