first, you need the supplemental schedule that accompanies the k-1 when units are sold.
Enter the k-1 info
Check the PTP box
Check sold a portion of interest in the partnership
Use QuickZoom to get to the disposition section (forms mode)
On the k-1 disposition section after entering the purchase and sales info use the ordinary income as the sales price. this comes from the supplemental schedule column 7 “Gain subject to recapture as ordinary income”.
(this amount is now also reported directly on the k-1 line 20AB)
Cost is zero
Ordinary income is the sales price.
This info flows to form 4797 line 10 and is taxed as ordinary income.
Now for the 8949.- capital asset sale worksheet
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.
The correct tax basis is the sum of columns 6 and 7 from the supplemental schedule
Some other things. Look at lines 20Z1. That COLUMN 7 AMOUNT/20AB should be added to the ordinary income (or netted if 20Z! is negative) for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.
