In a nutshell, if you receive distributions from a MLP where the negative capital balance plus non-recourse debt is still negative, you need enter an amount on the Sch D. To determine the Sale price amount, it would be the lesser of:
- the distribution amount received or
- the negative total from adding the negative capital balance plus non-recourse debt.
The cost basis would be 0.00. If you held the MLP for greater than a year, the gain would be long term. On the Sch D, your date of sale would be the date you received the distribution and your purchase date would be the original date you purchased the investment. Since this transaction is not reported on a 1099B, I would leave column F blank.
