Investors & landlords

@taxquestions44 An example:

You sell for $100

You bought for $80

The K-1 tells you that your Cumulative Adjustments are -35, so your cost basis is 80-35 = 45.

So you have a profit on the sale of $55.

The $55 profit isn't all taxed at Capital Gain rates.  Some of it is taxed at "Ordinary" rates.  The K-1 tells you that $25 is "Ordinary Gain" (or Gain subject to recapture.... Same thing).  So you should report $25 on form 4797 to be taxed at Ord Rates, and $30 on the 1099-B to be taxed at Capital Gain rates.  The way you get $30 to show up on the 1099-B is to make your cost = 80-35+25 = $70.

Assuming the 1099-B from your broker was code B or E (meaning cost was not reported to the IRS), you can just change the cost in either the interview or directly on the form.