Business & farm

I made a few typos so let me try again.   The sales worksheet attached to the K1 that I sold in 2020 showed the amount of ordinary income that is determined by the MLP itself .

'If you are interested, the reason that this is not all capital loss or gain involves the "recapture" of accelerated depreciation tax benefits when the MLP is sold. (and I mean fully disposed of, not a partial sale). Be that as it may, in the K1 interview , you are asked for sales and cost basis and also the amount of ordinary income or loss reported on the worksheet. That was 240 gain , which is carried to form 4797.  Entering the gain there on the interview accomplishes that. Then enter in the cost basis box the same amount, but as an inverse. (if the ordinary gain is 240 enter -240 in the basis box. And then enter zero in the sales proceeds box.  

The net result is that you have taken care of the 4797 entry,

and shown a zero gain on the sale itself, so that there will be no duplication with the entry from your broker statement for its reporting of sales proceeds and cost.

     But you have to adjust the broker reported basis to produce the correct capital gain or loss,   The sales proceeds are unchanged.  When you do the worksheet, you indicate your proceeds, and your cost basis which should be the same as your broker reported.  So assume 10000 proceeds

and 12000 cost.  That 12000 has then to be reduced by 

the adjustment to basis based on the recapture , which is an amount furnished by the MLP.  so assume that adjustment is -6000.  So your adjusted basis is 12000-6000 or 6000.

Your proceeds are 10000 so 12000-6000=4000 total gain.

If 240 has to be reported as ordinary gain, then 4000-240 is the amount of capital gain (or loss when applicable). 

ie  240 ordinary  3760 capital gain- total 4000.  

In my actual transaction, I had a capital loss and a positive ordinary gain

   So I go back to the 1099 B entry on form 8949 and adjust the broker reported cost so that a gain of 3760 is produced and reported via form 8949.  I report the basis adjustment on the  "basis as reported is not correct" box and then enter the required amount to produce a 3760 gain.  Remember that the PTP has not reported a basis to the IRS, so your 1099 B

is either sales category B or E (short or long non reported)

But there is one other factor.  The sales worksheet sometimes does not distinguish between long and short term correctly, or it it does, it is as a percentage  (for example  92long 8 short.  Since the broker is showing both entries in B and E

if you held the MLP long enough, you have to make the above cost basis adjustment to both the short (B) and long (E) entries, using either the percentage furnished by the MLP

or what you calculate on your own.  The ordinary gain going to 4797 is a single number that is not broken down into long and short.

        Again this workaround is not original and was posted previously by another contributor, but I found this to be doable and eliminate the duplication of sales proceeds

and also the creation of those bothersome category C

and F  8949 that some workarounds produce.

 So I hope this helps, and credit should go to whoever posted this originally.   PS  I have not mentioned the AMT amounts because AMT is no longer an issue for me.

   So end result   4797 is ok, capital gain or loss is ok, and there are 2 "b" adjustments on 8949 B and 8949 E.

You may wish to attach info to explain the b, but that seems to have taken care of everything.  Again my same question

why does TT not build this into its program? so those b adjustments are automatic once the ratio between short and long has been entered???