How I report the sale of MLP shares in Turbo Tax. I sold all shares.

[ttuser48]

What form or part of the interview are you referring to in 1. step 3) where you set your basis as the inverse of the ordinary gain?

[nexchap]

After entering in the Purchase Date and Sale Date, the next screen is titled "Enter Sale Information".  It starts with Sale Price, and then has lines for Selling Expense, Partnership Basis, Ordinary Gain, and 1250 Gain.  You'd set the 'Partnership Basis' on that screen to the inverse of whatever the partnership reported as Ordinary Gain.

[ttuser48]

Okay, that deleted the 8949 that the ordinary gain entry had generated.  Was that supposed to happen?   Thanks.

[nexchap]

Yes -- that's exactly what should happen.  That 8949 is usually a source of problems.  You should have a 1099-B from your broker.  Now that the Ordinary Gain is on your K-1, you go to the broker's 1099-B to change your basis so it calculates the correct Cap Gain/Loss.

[ttuser48]

Thank you.  Several solutions said not to fill in the partner's basis so I thought I had to edit the 8949 that got generated.  I had filled in the 1099B from the K-1 sales schedule figures since the basis was not reported on the 1099B.

[tnguyen5]

Hi nexchap, I have a question that I hope you can take some time to answer.

Seems like this year, "sales proceeds" has been changed to "sales price", there is also "selling expense". I enter both as 0.

Then there are "partnership basis", "ordinary gain" and "1250 gain" for both ordinary and ATM. How should I enter these 3 boxes if in my K-1, I have
"adjustments to basis" = -6
"ordinary gain" = 7
"alternative minimum tax basis adjustment" = 0

Thanks,

[nexchap]

On the K-1, Ordinary Gain is 7 for both columns (since your AMT adjustment is 0), and your Partnership Basis would be -7 in both columns.  That will cause the 7 Ord Gain to be processed on the K-1, but avoid any Capital Gain/Losses.

On your 1099-B, your basis is [original purchase] + [adjustments to basis = -6] + [Ord Gain = 7].

So if you bought for $100, your basis on the 1099-B would be $101.

[tnguyen5]

Thanks for your fast reply. Appreciate it!

[Anonymous]

Hi nexchap. I sold my MLPs for a long-term loss even after adjusting the cost basis. When I enter the ordinary gain and AMT basis adjustment as you say and adjust my 1099-B, my Federal Balance due increases dramatically. When I go to the final Federal Review it shows the basis of partnership interest as the inverse of the ordinary gains, total gain is the ordinary gains, and the ordinary gains as the ordinary gains. To my untrained eye, my return seems to be double counting the ordinary gain. Does that sound correct?

[nexchap]

Definitely shouldn't be double counting anything.  You're taxable income from the sale will show up in 3 places on the 1040:  
- line 14:  this is where you're Ord Gain will show up, after it flows through form 4797
- line 13:  cap gain / loss will show up here, reflecting whatever you put onto the 1099-B
- line 17:  if you had any losses on the K-1, or any suspended losses from prior years, a portion of them would be released and low to Sched E, and then to the 1040.

So if in doubt about the way you entered it, zero things out (set your 1099-B cost equal to revenue, and the K-1 sales worksheet to all 0s), record the values for those lines, then re-enter to see if things change by the right amount.

[tnguyen5]

Hi nexchap, I have a question that might be irrelevant. After finish entering my K-1 on turbotax, I realized that there is this "Sale of Business Property" with a number. I never owned any property or any business. Is it possible that this number came from my MLP K-1s?

[nexchap]

Very possible.  In TT, in Forms mode, if you right-click on a number one of the options is "Data Source".  That will give you ideas on where the number came from.

[idjit]

I purchased stock in an MLP in 2016 and sold all my interest in 2017.  When attempting to input my final K-1, it appears that TT released my previous passive loss carryover (ordinary income loss of 1048 for 2016) and added it to my passive loss for 2017 (ordinary income loss of 1994), giving me a total non-passive loss of 3042.  But it also asked for my previous at risk loss carryover, which is the same loss of 1048  (that ordinary loss was at risk money), so, it appears to count the 1048 loss twice, listing 1048 + 3042 for a total loss of 4090.  This doesn't feel correct.  Should I be entering the 1048 as both a passive loss carryover and an at risk loss carryover?  I've tried to eliminate the numbers in the at risk loss carryover sheet that comes up, but it will not keep the changes, and at one point, it tried to pull up the interview for an S corp (which I do not have).  I'm not sure what to do.

[nexchap]

@idjit -- there's a screen in the interview, just before it asks for carryover, titled "Describe the Partnership" (there's a couple screens titled that way, but this one is where you can check off "I have passive activity losses carried over...").  You would normally check off the 2nd box ("I have passive active losses...") and the 3rd box ("All my investment in this activity is at risk").  Are you also checking off the 4th box ("I have at-risk losses..."), and if so, why?  Checking that off brings up questions about at-risk carryovers, but for an MLP that you only owned for a year I wouldn't think that's relevant.

[idjit]

I did check "I have at-risk losses..." by accident, but if I go into to edit and either try to uncheck the box or delete the numbers in the sheet it brings up, nothing changes, so I'm trying to figure out how to ix it.