topic Calculating adjusted basis in an MLP. in Retirement tax questions

Calculating adjusted basis in an MLP.

twfox25 — Sat, 01 Mar 2025 17:12:48 GMT

I own shares in an MLP and receive K1s. In section L it lists the Partners' Capitol Account which I believe is my updated basis. The instructions for the K1 also refer to the IRS "Partner's Instructions" and includes a worksheet for calculating basis. When I go through the worksheet it doesn't match the section L "Ending capitol account" amount on the K1. Almost all of the difference is the Partner's share of liabilities, listed in section K, line1 as Nonrecourse. Should my share of the nonrecourse liabilities be included when calculating my adjusted basis? The liabilities have increased so my basis would go up if so. Thanks for the help.

Re: Calculating adjusted basis in an MLP.

twfox25 — Sat, 01 Mar 2025 17:24:39 GMT

Looks like I posted this to retirement instead of taxes. Sorry about that but don't know how to more it.

Re: Calculating adjusted basis in an MLP.

PatriciaV — Sun, 02 Mar 2025 20:24:45 GMT

The basis reported on Schedule K-1 is the "inside basis" of the shareholder, which may not be the same for the shareholder's "outside" basis due to transactions and income/expense allocations that may be specific to that shareholder's investment in the corporation. This is why you need to track your basis independently from Schedule K-1.

Allocated nonrecourse liabilities generally add to a partner's basis for distribution purposes and the allocation of deductions relating to the liabilities.

The IRS provides a worksheet to assist in tracking your basis. This Partnership Basis Worksheet is provided in the IRS Partner’s Instructions for Schedule K-1 (Form 1065).

Re: Calculating adjusted basis in an MLP.

twfox25 — Tue, 04 Mar 2025 13:41:57 GMT

Thank you. I'll continue using the Partner's worksheet to track my basis.