topic Selling master limited partnership? in Business & farm

Selling master limited partnership?

00taxtime636 — Tue, 04 Jun 2019 01:46:23 GMT

When I sell shares in a Master limited partnership or MLP, I have a sale price and a cost purchase price which usually equals cost basis. But in a partnership when I sell shares then do I subtract all partnership distributions from the cost of purchase to get my cost basis? What happens if it is negative do I have to report this as income and if so when and where on tax return?

There should be a Sales Schedule included with the K-1 th...

nexchap — Tue, 04 Jun 2019 01:46:25 GMT

There should be a Sales Schedule included with the K-1 that guides you through calculating your costs and gains. Follow those instructions and you'll arrive at your Capital Gain/Loss, and your Ordinary Gain (for MLPs, the gains from a sale are split into 2 parts). You'll have to do this with a spreadsheet, or paper and pencil (the old fashioned way), since TT doesn't have a worksheet for this. Then see this answer on how to enter the data into TT: https://ttlc.intuit.com/questions/3760966-how-i-report-the-sale-of-mlp-shares-in-turbo-tax-i-sold-al...

Re: Selling master limited partnership?

Bruce52 — Sat, 04 Sep 2021 16:58:04 GMT

You had gains each year your basis went negative. They should have been reported as capital gains on your return for that each year your distributions reduced your basis below 0.

If you failed to report the gains you are required to file amended returns and pay the tax plus interest and penalty.

Generally, as a technical matter amounts undeclared after six years, if the amount of income undeclared is under 25% of gross income is not assessable.

As a practical matter (although not correct) is to report a negative basis on schedule D so that the gain on disposition includes the amount previously unreported. If the amounts in question are relatively small this will probably work. The cost of filing amended returns may greatly exceed any tax penalty and interest due.

Re: Selling master limited partnership?

Rick19744 — Sat, 04 Sep 2021 20:43:45 GMT

@Bruce52 This is a two year old post.

Re: Selling master limited partnership?

Mike9241 — Sun, 05 Sep 2021 08:17:30 GMT

your partnership basis is what you put in (purchase price) + all the income reported on the k-1's - all the deductions reported on the k-1 - all the distributions. actually, there should be no need to go through this. a MLP provides a supplemental schedule when units are sold that show that gives you all the info you need. it would include:

a) units sold

b) sales date

c) purchase price

d) cumulative adjustments to basis

e) cost basis which should be your tax basis and should equal c) less d) (minor difference is possible due to rounding

f) maybe gain subject to recapture as ordinary income

thus

sales price (per 1099-b)

less e) = gain

gain less f) if applicable = capital gain

Re: Selling master limited partnership?

M-MTax — Mon, 06 Sep 2021 19:34:27 GMT

@Mike9241 do you bother to read the DATES on the posts or read stuff posted by others?