Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
jpuglies98
New Member

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

This is a publicly traded partnership.
1 Best answer

Accepted Solutions
nexchap
Level 8

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

If you study section L of the K-1, you'll see that your basis is changed both by actual distributions (these show up on the "Withdrawals and Distributions" line) AND by all the other financials shown on the K-1 (which total to the "Current Yr increase (decrease)" line).  That line ("Current Yr increase (decrease)") is what can change your basis far more than actual cash distributions


**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!

View solution in original post

5 Replies
jpuglies98
New Member

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

The regs clearly state that partner (outside) basis cannot go below zero and if it does losses must be carried forward and and distributions reported as capital gains. But T/T did not do that and I cannot find out why. Any ideas?
nexchap
Level 8

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

Sorry -- from your question I thought you were asking why your basis changed by more than distributions.

TT won't automatically change the handling of everything based on the values you place into Section L and Section K.  Part of that is probably because they just haven't tried to put in all the logic into the program.  But part of it is also that the rules around basis are very complex, and the right handling isn't automatic.  For example, your basis is the total of your capital account and your nonrecourse loan allocation.  So your capital account can go negative (meaning you no longer have capital at risk) but you still have positive basis (due to the loans).  That has to be handled differently than when your basis actually goes negative.

So if your basis is actually negative, you'll have to create the entry on Sched D for distributions in excess of basis.  Here's a link on how to do that:  <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4395965-how-where-to-report-distribution-in-excess-of-basis-llc">h...>
**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!
jpuglies98
New Member

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

Dear Nexchap, a sincere thank you for your response.  You clearly know your way around MLP taxation. That is extremely rare in my experience.
nexchap
Level 8

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

Thanks.  Happy to help!
**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!
nexchap
Level 8

After accounting for losses and distributions the basis of my MLP is negative more than the amount of the distributions. But no capital gain is shown. How can this be ?

If you study section L of the K-1, you'll see that your basis is changed both by actual distributions (these show up on the "Withdrawals and Distributions" line) AND by all the other financials shown on the K-1 (which total to the "Current Yr increase (decrease)" line).  That line ("Current Yr increase (decrease)") is what can change your basis far more than actual cash distributions


**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer. seasoned, TurboTax user. Use any advice accordingly!
Dynamic AdsDynamic Ads
Privacy Settings
v