Question Regarding MLPs K-1 and reporting on 8949, 4797 and Schedule E.
Lets start with an easy one.
1: If K-1 Box 1 and Box 2 are positive do you check them as Passive or Non Passive. I have seen examples both ways and never sure which one it is.
I know losses are suspended but can anything be written off like Box 20 Depletion or does that have to wait until you sell the MLP.
So now lets say I sell an MLP that I owned for 4 years and had -$100 ordinary losses each year on the year I sold it I had $500 ordinary Income. From my understanding I can write the $400 losses against the $500 income on Schedule E.
2: When I sell, in addition to the $400 loss what else am I allowed to write off. How about that depletion from Box 20. Or any Box 10 net section gains / losses that were losses in the past. What can you write off when you finally sell the MLP?
The rest of my Qs are from an actual MLP sell:
Sale Price From 1099: $912
Cost From 1099: - $4936 (This is before K-1 Adjustment)
Adjustment to Basis from K1: $-2085
So Based on that My Adjust Cost Basis is: $4936 minus $2085 = $2851
So My Total Gain / Loss is: $912 minus $2851 = -1939
Ordinary Gain from the MLP supplied K1 Table = $289
Therefore the Cap Gain is: $-1939 minus $289 = - $2228
Q1) First did I do all the calculation correctly?,
Q2) On Form 8949 for the Gain / Loss should it be the $-1939 (the total Gain) or -$2228 (the Capital Gain),
Q3) On Form 4797 I am reporting the Ordinary Gain of $289 with a sales price of $912. But I am not sure where the basis is suppose to come from. Do I just take $912 - $289 and make $623 as the basis??????
Q4) Now this is where it gets really tricky. Now that I am selling the MLP from what I read I can now take the years with passive losses and now apply those losses to any gains of that particular MLP or can the losses can be applied to all MLPs sold, I am not 100% sure on that one.?
Q5) Building on last question. Do I put all the prior year losses in Section E NonPassive Losses from Schedule K-1 showing a large rental loss on Schedule E and on the 1040? And what can I include in those losses? Can I only the Ordinary Business Income (loss) from K-1 Box 1 or can I include any of the other losses that were not allowed until you sold the MLP.
