Another Question about reporting the Sale of an MLP in Turbotax

[johnalay]

I'm very thankful that some folks are willing to help with these issues.  

I purchased units an MLP (Magellan) in 4 lots in about 8 years ago.  When Magellan announced it was going to merge I sold all the units in 2023.  They are reported on my brokerage 1099B with box E checked.

Using some clues I found in other MLP threads, I followed the K-1 dialog and selected "Disposed of a portion of my interest" and then Sold Partnership Interest.  I'm only given one box for Purchase and Sale date.  I used the sales price from my brokerage 1099B and Partnership Basis (Regular and AMT) and Ordinary Gain from the Sales Schedule included in the K-1 Package.  A correct 8949 and 4797 were generated, but the 8949  has box F checked (not reported on 1099B) and the 8949 from the 1099B is still there, so I seem to be paying on the gain twice.  And the Sales Schedule says the amount of the ordinary gain is considered Qualifying PTP income for section 199A.  However, the 20Z amount is a small loss, while the large gain is listed as 20AB Section 751 Gain/(Loss) and is not included in line 13 of form 1040.  Should I prorate the amounts shown on the 3rd copy of 8949 (Box F checked) by the number of units in each lot onto the 2nd copy (Box E) of 8949 and delete the 3rd copy?  And how do I get the ordinary gain counted as PTP income (if I can do that.)  

Again, I greatly appreciate your help!

[nexchap · Accepted solution]

@johnalay Since you sold all units, your K-1 should be marked as 'Final'.  So rather than checking "Disposed of a portion..." you'd check "This partnership ended in 2023", then "Complete Disposition".

On the sale screen, assuming AMT isn't an issue for you, set the sales price equal to your Ordinary Gain, and Basis  as 0.  This will get the Ordinary Gain to Form 4797, but won't create a new 8949 that double-counts your gain.  You'll use your brokerage supplied 1099-B to report the Capital Gain/Loss, but note that you'll need to adjust the basis to match what's shown on your sales schedule.

For QBI, TT doesn't automatically transfer the 20AB info.  When you get to the interview for that, you can put the 20AB amount on the "Other Income" line, but also put it on the "Total ordinary Form 4797 gain/loss" line.  That will get it properly added into your QBI calculation.

[johnalay]

Thanks for your great answer!  It seems have resolved my problems.  

Just to make sure I got one thing right, the interview for the QBI information is in the "We see you have Section 199A income" section, right?  There were similarly worded entries in "Carryover" sections, but that doesn't seem right.

I seem to have the right number of forms 8549 now, the 4797 looks right and even the 8595 looks "close" (The Qualified PTP income is not the full amount of the ordinary income, but I believe there was a carryover loss that reduced that.)

Thanks again for your outstanding help!

[DianeW777]

Yes, you would enter the QBI information in the section 'We see you have Section 199A income" section, right?' (nothing for carryover if you don't have a QBI loss carryover).

Looks like you're all set with the information provided by nexchap for the 4797 and 8949.

@johnalay 

[johnalay]

Sorry, one more question!

My Sales Schedule says that in addition to everything else I've done, I should: 
"Lastly, attach an IRC Section 751
Statement to your return showing the date, the amount in Column 7, and the capital gain or loss for each sale."

Is there a way to do this in TurboTax?

Thanks in advance

[nexchap]

@johnalay The only thing TT offers is a 'blank form' you can access in Forms mode.  It won't get submitted electronically, but it will print out with your return.