Foreign tax credit on PTP dividends Not reported on K1 or broker 1099

[vogelwk]

How to report foreign tax paid on dividends of publicly traded partnership not reported on K1 or broker 1099. The broker and the partnership each say the other should be reporting and I can't get either to change their opinion. 

[rogge1722]

The K-1 is sent to you directly from the PTP.  If  box 16 has entries in the various codes but 16(P) is vacant, that means the PTP paid no foreign taxes. This is not abnormal.  The only info the broker has are the distributions paid to you and that is informational only.

[vogelwk]

My Broker (Fidelity) withheld and paid 15% Foreign tax (to Canada) on BEP Dividends (a PTP)  but did and will not include this in my 1099-DIV. For a Canadian corp such as TD, which I also own, they also withhold 15% Canadian tax and report it to me on 1099-DIV without issue. While Fidelity witholds the foreign tax they say it's the PTP responsibilty to report the withheld foreign tax. For its part, BEP say the broker who withholds tax should report it. I went back and forth last year without resolution. 

[rogge1722]

If it can be assumed that BEP pays a dividend and not a distribution then here is my suggestion.

Open up a blank 1099_DIV.  Use BEP's full name as payer.  In box 1a, insert the total (ordinary dividends paid) but subtract that amount from fidelity's 1099-DIV box 1a.  Do the same for box 1b, (qualified dividends).  This way the total in schedule B line 6 will remain constant.  Insert the tax paid in box 7.  The country is Canada.  You will have 2 1099's, one for fidelity, country (RIC) and one for Canada.  Then run both thru the foreign tax credit interview.

[jymyyl]

But if it's a distribution, how to claim back the foreign tax paid on the distribution? I have the same issue here with BEP.

BEP paid a quarterly distribution to stock holders, on which foreign tax was withheld. Because these quarterly payments are partnership distributions not the dividends (partnership distributions are not income but reduce the cost basis of BEP), the broker didn't include these payment transactions in 1099-DIV but just reported them in a Supplemental Tax Information file which is for informational purpose and not reported to IRS. So I have no way to claim foreign tax credit on this foreign tax paid which is not reported in 1099-DIV. On the other hand, BEP thought that this foreign tax paid was withheld by the broker and should be reported in 1099 file by the broker, so BEP didn't include this foreign tax in their Schedule K-1 either. How should I do now? How can I get back the foreign taxes I have already paid?

[DaveF1006]

The main concept of a Foreign Tax Credit (FTC) is if you have taxable income that has been taxed by a foreign country, to receive a a credit for that tax that as paid. This is  because you will be taxed again on that same income when you report it  on your US tax return so you don't want to be double taxed.

Partnership distributions are usually return of capital and is not taxable income, unless there was no basis in your partnership account. Then it is taxable income. 

in order for the IRS and Turbo Tax to recognize this as taxable income it must be reported on a tax form such as a 1099 DIV or on a K1.  If reported as a distribution on a k1, then this isn't taxable income and you won't be able to claim a foreign tax credit on the distribution.

@jymyyl