with the K-1 there should have been a sales schedule where the ordinary gain (depreciation recapture on disposal of your interest - labeled as 751 gain or ordinary income gain or some similar wording) is reported. this should also be in box 20AB of the k-1. the IRS gets this info so if you don't report it expect a tax notice.
You use the sales section in the Turbotax K-1 to report this ordinary income on the sale. report it as sales price.
basis is 0
ordinary income is equal to the sales price.
you do not report the capital gain/loss here
for the capital gain/loss reporting look at the sales schedule. This is reported on from 8949/1099-B and the cost shown is not correct. It's as follows and should be on the supplemental sales schedule:
a) what you paid originally
b) +/- cumulative adjustments to basis. your preliminary cost basis is a) +/- b) or if there's a column that says cost basis use that
c) to the cost basis you add the ordinary income reported in the other section
d)your capital gain/loss is your sales price less the adjusted cost basis.
cost basis before ordinary income adjustment - you missed something like the income & losses reported over the years you held it
1) what you paid
2) + profits/income - losses/deductions reported for all years of ownership
3) - all distributions received for all years of ownership
-2) and 3) are why the sales schedule reports as the cumulative adjustment to basis.
what no one told you is that most PTPs have depreciable personal property. when you sell your interest that depreciation is recaptured as ordinary income
so yes you now have $84K of ordinary income that will be offset, in part, by any suspended losses of the PTP.
the longer you hold a PTP the more the recapture. This will reduce the capital gain and can even create a capital loss
If you want to check your cost before the ordinary income adjustment look at the ending capital account on your 2022 K-1 schedule L. That should be your tax basis at the end of 2022/start of 2023
to that add profit or subtract loss for 2023 that's also on schedule L and finally subtract the distributions in box 19
