How to file a K-1 correctly if Robinhood is already reporting the sale of shares for which I also got a K1?

You definitely enter all the K-1 info.  In the K-1 sale section, you can leave everything blank (or 0).  This will make sure the other K-1 entries are categorized correctly.

On the 1099-B interview, you'd change the cost basis to 5000.  Note that the 1099-B from Robinhood should be code B or E (meaning cost NOT reported to IRS).  If they didn't code it that way, they made a mistake because they can't know the correct cost basis.  You might be able to get the to correct it, but if not you still need to make the correction yourself.  In the unlikely case that the IRS ever sends an inquiry about it, the K-1 is all you need to explain why you made the change.

@nexchap 

Yeah, Robinhood mentioned it as Code D in 1099-B form (i.e. Basis is provided to the IRS). I will try to contact them but I'm not sure If they will correct it and I will get an updated tax document from them before 18th April deadline. Is it still ok to modify the cost basis or delete the entry in such a case? 

So which Sales entry I should keep - 

1. Leave everything in K-1 Sales section as blank. And manually adjust the cost basis in corresponding Robinhood USO sale entries. 

2. OR, enter the K-1 sales sections while using the Proceeds amount from RobinHood 1099-B form and delete the 1099-B entries made by RobinHood for USO. 

@djain Definitely change the cost.  They're your taxes.  Robinhood's error doesn't change the requirement that you report accurate data.

As to approach, either gets you to the same tax return.  My preference is to avoid using the K-1 for Cap Gain reporting, since there are circumstances where it can create errors.  So I always handle the Cap Gains in the 1099-B interview for consistency.

@nexchap 

Thanks for clarifying. Just couple more questions - 

1. While changing the actual Cost basis in 1099-B entries from RobinHood for USO, in Turbo Tax should I also change the Sales section of this transaction entry from "Long term basis reported to IRS (covered)" to "Long term basis not reported to IRS (non-covered)"? 

2. About K1 form, I have entry in Part III, Line 13 as W-Other Deductions as 17 USD.  The K1-form instructions describe it as - "Line 13w Other deductions – Trader expenses. For individuals, combine the values from lines 11i and 13w to determine whether you have a nonpassive income or loss. Reported on Schedule E, Line 28, (i) or (k)". 

So while entering this in Turbo Tax, what I should write in "Enter Code W Detail" ?  Check the below pic for all the options. I'm thinking as 'Investment Interest Expenses' or should it go in "I have another Description Item"? 

EDIT - Also 1 more thing, while I leave everything in K-1 Sales section as blank. Later on while reviewing all the tax info, Turbo Tax complained about the missing Sales price and Partnership Basis in K1-Sales section. So I had to enter both as 0 mentioning  actual assest acquired date and disposed date. I guess this will make an entry for this in 8949 form with buy, sell dates and both proceeds, cost basis as 0. That should be fine I guess.. right? 

@djain 1) Don't change the coding on the 1099-B.  Robinhood reported the cost, so the coding is right.  Changing it will just confuse the IRS.

2) "Trader expenses" is not the same as investment interest expense (which is related to money borrowed to make trades).  I'd suggest posting a separate question to ask how / where to get this on your taxes (I don't know the answer).  None of the options look quite right, but if you use "I have another description" TT won't actually put the entry anywhere:  you still have to find a spot to enter it.

3) 0 instead of blank on the K-1 form is fine.  TT won't actually create a new 8949 since there's no cap gain/loss.

I have another question regarding the box 9  PERCENTAGE LONG TERM.  How to enter the percentage long term to Turbox tax when it's not 100%?

Any help is greatly appreciated!

@cchu01 Assuming this is a sale of a PTP, you'll be reporting all cap gains by modifying the cost basis of the 1099-B you received from the broker.  What that sales schedule is telling you is that each of your sales is partially short term, and partially long term.

As an example, if the 3rd line item (adjustment of $15 and 94% long) was the sale of 100 shares with a purchase price of $100, you'd report the sale of 94 shares as long term and 6 shares as short term.  94% of the $15 adjustment would be applied to the long term shares ($14.1, so cost basis of $94-14.1 = 79.90) and the remainder to the short term shares ($6-$.90 = $5.10)

@nexchap  Thanks so much.  If I understood it correctly, I'll be reporting the cap gains for the PTP sales by modifying the cost basis of the 1099-B I received from the broker under the investment income section instead of reporting the cap gains via K-1 interview questionnaire under the Schedule K-1 section in turbo tax, right?  

@cchu01 Correct.  In the K-1 section, you do not want any Cap Gain.  Note that if you have Ordinary Gain reported on the K-1, you have to fill out the sale questions like this:

- Enter $0 for Sale Price

- Enter Ordinary Gain in the "Regular" and "AMT" columns

- Enter the inverse of the Ordinary Gain (e.g., -100 if Ord Gain is 100) in the Partnership Basis columns.

If done correctly, the next screen (Review Investment Gain or Loss) will show "zero" everywhere and then you can go to the 1099-B to report your Cap Gain/Loss

Thanks for all of this nexchap,

I have the same situation (sold S-Corp PTP shares completely, and in my case a mix of 90% long term and 10% short term) and just want to make sure I did it correctly. I hope it is ok if I tag on since the same subject.

Per your instructions I entered 0 for sales price in the K-1 interview, and entered the same only negative values for partnership basis as I had put in the ordinary gain entry.  The next page shows all zeros. I entered the box number values as shown on the K-1.

I went to the 1099-B and adjusted the total cost basis by subtracting 90% of the cumulative adjustment to basis figure from my K-1 sales schedule from the total cost basis for long term not reported to IRS and 10% from the short term.

I did not make any other changes. I am reviewing my tax docs now before filing and it is all incomprehensible to me so just hoping it is right. 

I am so thankful I found this and other conversations where you have helped out with this issue!

@Sis-Q It sounds like you did the K-1 fine.  But the adjustment on the 1099-B may have missed a couple things:

• The broker sent you a 1099-B with a cost filled in.  That cost -- the one the broker supplied -- may not be correct.  It should be the initial amount you paid for the shares.  Some brokers adjust that cost, so make sure you double-check.
• Adjusting the 1099-B requires you use both the "Adjustments" as well as the Ordinary Gain.  The cost you enter on your 1099-B should be "Purchase Price"+"Adjustments"+"Ordinary Gain".  So if you bought for $100, had ($30) in adjustments, and $10 in Ord Gain, you'd enter $80 as your cost.  All of that would be split 90/10 in your example.

OK Nexchap -  I am following those instructions but do find it confusing since we zero'd out the ordinary gain for the K-1 and then also add it to the cost basis on the 1099.  It just seems unintuitive to increase the cost by adding in the gain...

@Sis-Q You zeroed out the "Capital" gain on the K-1, not the "Ordinary" gain.  The Ordinary Gain you entered in the K-1 is being reported on Form 4797, so you're paying tax on it.

The issue is that the "Cumulative Adjustments" that reduce your basis include 2 different types of adjustment:  some that are taxed at Capital Gain rates, and some that are taxed at "Ordinary" (or regular W-2 like) rates.  So they give you the total adjustments (e.g. -$30), and then they also tell you how much of that was "Ordinary" (e.g. $20).  So you pay Ordinary tax on the $20 via form 4797, and you back it out of your 1099-B so you don't report it twice.

OK, I think I am tracking. In my case the adjustments (-$256) are less than the ordinary gain ($306).

I see turbo tax is having me upload a pdf of the 1099B so I think I should add a note on it saying it was adjusted per the K-1 for that investment. 

Thank you again for your incredible patience and knowledge.

@nexchapThanks for all your helps and really appreciated.

Okay, so in Turbotax how do you break up a sale such as this into two lots when it is reported as a single lot on a 1099?

For instance, I have a single sale which is reported on a 1099 as 100% long-term, but due to the unifying bases of partnerships rule 90% is LT and 10% is ST, so I have to create a ST entry to the contrary of my 1099.  I don't see a way to add a sale within that 1099, while adding it outside the 1099 would mean I would have to remove a portion of the proceeds from the 1099, creating a mismatch in numbers for the IRS.

Thanks.

something is wrong. the brokerage where you bought the shares reports the purchase and sales dates to the partnership. Based on those dates it determined that 90% of shares were held long-term and 10% were held short term. That's what the 1099-B should show 10% as code B in the short-term section and 90% as code D in the long-term section.    sometimes a brokerage will also provide you with an unofficial "1099" report by security.   look at the 1099 what dates, purchase and sale, are being used for the lots.  codes B and D merely tell you that proceeds but not tax basis were reported to the IRS. B for short-term and D for long-term it is the brokerage's responsibility to properly report to the IRS based on holding period so what code is the 1099 using for the lots. if in fact all the shares were held long-term you would need to contact the partnership for a corrected sales schedule. it probably won't change anything and if the partnership has bad dates, rather then wait for a corrected sales schedule which the IRS does not get report all as long-term.

if 90/10 holdings are correct split the proceeds and tax basis 90/10 and use code T for both

from 8949 instructions

    You received a Form 1099-B (or substitute
statement) and the type of gain (or loss)
shown in box 2 is incorrect
use code T
Report the transaction on the correct part of Form 8949,
and enter -0- in column (g) on that part of the form if there
are no adjustments needed for the transaction.

@chiguy2016 When you sell you tell the brokerage what lots to use.  That's how they categorize it as short or long term.  With PTPs, given the unified basis requirements, you need to tell the brokerage to sell proportionately from all lots: that way your 1099 and your sales schedule will match up.

Given that you didn't do that this time, you'll have to use code T as mentioned in the previous reply to change your 1099 and report the short/long split.