You must enter in the K-1 and report the sale on the 1099-B using the basis info from the K-1. Failure to do both will get you an IRS audit letter.
1099 box 1d Proceeds $20,296. K-1 box 11 -$478, box L Beginning Capital $23,706, Withdraw & Distribution $23,227 which number should I use for 1099B Cost basis?
Look at your K-1 ... back about 3-4 pages for the sales info worksheets.
Intuit says the sale should only be entered once:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4384570-how-to-handle-schedule-k-1-form-1065-for-a-partnership-stock-which-was-sold-and-reported-on-the-1099b-from-my-broker-without-the-gain-being-counted-twice">https://ttlc.intuit.com/questions/4384570-how-to-handle-schedule-k-1-form-1065-for-a-partnership-stock-which-was-sold-and-reported-on-the-1099b-from-my-broker-without-the-gain-being-counted-twice</a>
You do only enter the SALE once ... however you must enter the income from the K-1 as well as the sale. There is a worksheet in the K-1 paperwork to help you enter the sale correctly on the Sch D & form 4797 if needed.
TT Premier actually ask about the SALE of my PLP in the K-1 section. The cost basis that was reported on my 1099-B, and the adjusted cost basis from the "Sales Schedule" of the K-1 were, of course, significantly different. When I enter the information from the 1099-B I get a simple Loss (Purchase price - Sales price). But, the information I enter from the K-1 Sales Sckedule has and adjusted cost basis plus a "Gain Subject to Recapture as Ordinary Income" figure. The instructions with the K-1 tell me to enter the Cost Basis in Form 8949, Column E and the Gain in Form 4797, Part II, Line 10 and Form 8949, Column G. THIS QUOTE IS IN THE INSTRUCTIONS WITH THE K-1 : (Reporting this gain as a NEGATIVE adjustment in Column G of Form 8949 should generally result in the correct capital gain or loss)
Having said all this - I am still unsure if I report this once or twice. I have played with TT and if I report it twice, I DO get a different TAX COST.
Agree. See the same. TT mentions only once and recommends the K-1 in the above link.....
"Yes, you should enter the sale information only once. Your best option would be to enter the information only under the Schedule K-1 section. This allows TurboTax to use your historical basis and release any passive losses that may have been carried forward." ….. The sale needs to be reported only once. This is very common with these interests in the partnerships (K-1 and 1099B).
I personally like to report it only in the K-1 section as my basis information is also there.
IRS is aware of the multiple reporting of these sales and will look for it in the matching program to prevent you from getting a letter from them.
Answered by TurboTaxMichaelL1 to this question
Is there anywhere in the IRS tax code that states that K1 information is preferred over 1099B for sales of publicly traded partnership interests? In my case, I received both K1 and 1099B for my 2018 sale of partnership units. The 1099B doesn't list any cost basis information, so the K1 is the only record I have that includes those details. It would be nice if there was published IRS guidance that confirms that.
I have been round and round with this issue. Spent 2 hours on the phone with a CPA from TT who said the correct way to enter the partnership sale is to enter the 1099B under stock and use the basis from my original sale (which results in a loss) and then enter again from K-1 using sale amount from partnership minus the k-1 cost basis. This results in two entries on the 8949 which he assured me was correct indicating one would offset the other. Then the gain subject to recapture as ordinary income (which is supposed to get entered as a negative amount in column g on form 8949) is listed as a positive number under Form 4797, Part II, line 10. I'm confused after reading some posts about only entering one place and not sure my calculation is correct. Anyone have any tips on understanding what is correct.
So if I understand correctly, your saying don't enter the 1099B info. at all under that section but enter the sale with the k-1 cost basis under the k-1 section. Any help is appreciated.
That’s correct.
Understand that, the IRS isn’t looking for your Form 1099-B specifically, even though the payer has electronically filed your 1099-B with them.
Rather, the IRS only needs to verify that there’s an amount equal to or greater than the relevant 1099-B amount reported in certain places on your return where that type of transaction would likely be reported.
If i report it in both places won't i get double taxed? Let's say my profit is USD 1k, then K1 will show +1k and Schedule D will also show +1k and so I pay capital gains on 2k of taxes?
You can add the income reported from your K-1 entry to the cost basis on the 1099-B entry to avoid a double taxation issue.
First, report the form 1099-B transaction like you normally do. When you enter the sale and cost basis information you will see this screen:
Click on the "I'll enter additional info on my own" option. You will then see a screen where you can add the correct cost basis, where you add the income reported on the K-1 schedule. The difference will show up as an adjustment on your schedule D.
What about a situation like this where I got this on a 1099-B:
And this on the K-1:
I'm guessing they round out the number for the K-1s as the others I got are similar. Should I just leave the 1099-Bs/entries on form 8949 as they are or would I delete the two entries in TurboTax and then add one entry with something like:
Box 1c Date Sold: 12/9/2019
Box 1b Date Acquired: Various
Box 1d Sales Proceeds: 3
Box 1e Cost or Other Basis: 3
It appears to be a duplicate entry, but since they both report zero gain, they won't affect your tax. Because the amounts are immaterial, if you have already reported them, I would suggest you leave them alone.
Otherwise, just report one of them, the 1099-B would be easier, so go with that one!
@ThomasM125 thanks for the suggestion about entering the corrected cost basis on 1099B:
corrected cost basis = cost basis from 1099B + gain subject to recapture as ordinary income from K-1
That results in the negative adjustment in Column G of Form 8949, as suggested in instructions on K-1 for Column 7 (gain subject to recapture as ordinary income):
Column 7: The instructions to Form 8949 are unclear in the determination of capital gain where total gain on the sale of units is partially ordinary gain. Reporting this amount as a negative adjustment in Column G of Form 8949 should generally result in the correct capital gain or loss.
What I'm unclear is, I still have two 8949 forms:
8949 generated based on the 1099B from my broker. This is where the corrected cost basis has been applied.
8949 generated based on the K-1 sale interview.
Some people suggest that the 1099B sale information from the broker should be deleted. That deletes the first 8949 form.
Could you clarify what is the right approach?
Enter the corrected cost basis on 1099B from the broker as negative ordinary income. Keep two 8949.
Remove the sale from 1099B from the broker. Keep 8949 from the sale on K-1.
The two approaches result in different tax refund.
Appreciate your help!
I am assuming that the K-1 gain is duplicated on the form 1099-B reporting. If so, you would need to adjust the cost basis of the sale reported on the 1099-B to reflect a zero gain. That way, the gain or loss reflected on the K-1 would be the only one appearing on your tax return.
I think you may have an issue with ordinary income being reflected on the K-1 form. You can't report ordinary income from a form 1099-B form, it would all be capital gain income.
So, if you try to just report the form 1099-B information, it may give you a different result that if you report the same information from a k-1 form.
So, if the form 1099-B duplicates the gain reported on the K-1 schedule, report the sale amount on the form 1099-B as stated on the form and adjust the cost basis to reduce the gain to zero.
Question:
I have an individual owned public investment k-1 with a sale showing proceeds $17,945 with basis $11,282 sowing an ordinary income of $5,516 but states to enter on 8949. The sale on the 1099-B shows same proceed of $17,945 but basis of $21,048, a $3,103 8949 LT loss.
Are you saying to use the k-1 data that is supplement for basis vs. the 1099-B reported to IRS or enter in both sales transactions for the same sale?
the broker 1099B does not adjust your original cost for partnership activity. the partnership provided you with a supplemental schedule that shows your tax basis and if any part of sale that is ordinary gain under section 751.
so on form 8949 show sales proceeds as $17945. basis as $11282+ $5516 which is the ordinary gain resulting in a capital gain of $1147
on the disposition part of the k-1 worksheet you will show purchase and sales dates based on the 1099B. you will show sale price of $5516 on line 5 and ordinary income of $5516 on line 9
also make sure you check off this is a final k-1 so any passive suspended and current losses are allowed.
I wasn't sure I would get a response so I am attaching actual info. to confirm your original reply is still correct or adjust, thank you for response!
k-1 Supplemental actual
Purchase Price $17,945, revised purchase basis = 11,282, Box 7 subject to ordinary gain 5,516
1099-B
Proceeds 16,260
cost basis 18,075
LT Loss 8949 = -1,815
Thank you!
I read another answer that said to enter all the K1 info but leave the sale and basis amounts blank, and use the basis from the K1 to fill in the sale info in the 1099 section. Is that what you mean? Because if I enter the sale figures in both places, it adds extra tax.
So, enter the PLP's income info in the K1, indicate that you did dispose of (in my case partial) interest, enter the purchase and sales dates, but skip the price and basis section. Then use the K1 adjusted basis to populate the sale info in the 1099? In my case, all of my PLP sales are listed as N/A for basis in the broker's 1099, so I should update that with the basis from the K1?