Thank you for the reply. I'm working with those numbers right now.
First I should say that TurboTax never let me cancel out my Box 3 income with Box 1 losses. In fact, it wouldn't even let me enter those two boxes in the same K-1 entry - it made me create two separate K-1 entries. One for ordinary business income, and another for other net rental income. The "ordinary" K-1 kept racking up losses, and the "rental" K-1 kept generating "income" that I never received, but payed actual taxes on.
I did receive the final K-1 and Sales Schedule from the PTP, and as you said my tax basis *should* be the amount in the column labeled cost basis plus the column labeled "gain subject to recapture as ordinary income". In my case I get: -80K + 87K = 7K. But I sold all my units for 4K, leaving me with only a 3K loss!
Now the one thing I do know for sure based on my bank account is that I definitely lost 26K with this investment, along with losses associated with paying taxes on income I never received. When I deduct my 78K worth of carryover losses from the 87K recaptured ordinary income on my sales schedule, I'm still left with 9K of imaginary income that I have to pay taxes on. This is where I'm lost. According to Sales Schedules and TurboTax even after disposing of my units at a loss and never receiving any income, I somehow have 9K of gain to pay tax on with only 3K of capital losses. Something isn't right and I can't figure it out.
Thank you so much for your help!
