How I report the sale of MLP shares in Turbo Tax. I sold all shares.

[nexchap]

@-tax-prep-2018on You use the 54%.  But not to allocate 'cost basis' -- you allocate 'adjustments to cost basis'.  I assume that's what you meant, but always good to clarify.

[-tax-prep-2018on]

Nexchap,

Yes. Unfortunately, neither Form 8949 nor Schedule D has a column for "Adjustments to Cost Basis." They both only have columns headed "Cost or other basis" and "Adjustment to gain or loss." I looked through the IRS instruction on form 8949 and seems that there is a condition which applies that might answer how to do this: 

I.e.— 

You received a Form 1099-B (or substitute statement) and the basis shown in box 1e is incorrect

The instructions are: 

• If this transaction is reported on a Part I with box B checked at the top or if this transaction is reported on a Part II with box E checked at the top, enter the correct basis in column (e), and enter -0- in column (g). 

Based on this, my instinct would be to put the appropriate adjusted basis number for ST and then LT into the respective Cost or Other Basis boxes, figuring the allocation of total adjustment for ST and LT shares by percentage (i.e. 46 and 54%)

Does this seem right to you?

[nexchap]

@-tax-prep-2018on That seems right.  If the transaction is code B or E, I go into Forms mode and edit the 1099-B directly:  just change the incorrect number reported by the broker (which hasn't been reported to the IRS) to the correct number that you've calculated from the K-1 info.

[-tax-prep-2018on]

Will do it that way! Thanks so much for guiding me through this complicated process. Never again I hope. 

[TaxationIsTheft1776]

First step---Make sure that you choose "OTHER" in the initial K-1 interview when it asks whether you have Business or Rental income in boxes 1-3.  This way the K-1 will know that this is not for ordinary business income or rental income.

[bobby46]

This question is unrelated. I had a loss on the MLP EQM. It got shut down and converted into ETRN. What would be the sale proceeds for this MLP? Will that be the last traded price on the last day of its existence multiplied by the number of shares? The brokerage 1099 B on that MLP information seems inaccurate and way higher than what would the number be if the share price of the MLP on its last traded day was used to calculate the sales proceeds.  The 1099 B form from the brokerage also says that its an uncovered security.

Will reporting a loss this way with EQM  affect the loss in the future from ETRN  ( its a corporation and not an MLP) coz ETRN is also underwater.

[nexchap]

@bobby46 There's info on the tax treatment, and how to calculate the proceeds from the buyout, here:  https://ir.equitransmidstream.com/resources/ETRN-and-EQM-Merger/default.aspx

As I read that, your proceeds from the buyout should be the number of ETRN shares you received * 9.05 (plus any cash you may have received if that was part of the deal).  That should also be what the broker provided on the 1099-B.  If the broker provided a different number, you'd want to talk to them to see if it can be corrected (or find out why they think they're right).

As for tax treatment, and future basis in ETRN, just think of this buyout as two completely different transactions:

• You sold all shares of EQM for $x
• You then turned around and bought a bunch of ETRN stock for $x

[Stop-Tax-Co-Lobbying]

@nexchap First, thank you for all your assistance through this thread as I've had a bunch of questions answered just by going through it! However, one still remains (despite the past 3 hours spent reading; though it's quite possible my comprehension is fried at this point) -- how to report long and short term sales reported on the same K-1. Do I go through the K-1 interview twice? If so, how do I break up the information provided on the K-1? (Short and long term sales are separated on the broker's 1099-B so I assume using that info for each run-through is fine.)

[nexchap]

@Stop-Tax-Co-Lobbying Nothing on the K-1 (e.g., Ordinary Income) is affected by holding period:  you enter it the same way regardless of long or short or a combo of both.  In the sale part of the interview, when it asks about purchase and sale dates, you can just enter 'Various' if there's not a single date.  The only thing you need to adjust is over on the 1099-B, where you'll use the info on the Sales Schedule to adjust the short and long term entries.

[Stop-Tax-Co-Lobbying]

@nexchap Thanks so much for the quick response! I created an Excel spreadsheet to make the calculations for me. Is it safe to assume that I can just divvy up Basis Adjustments and Ordinary Gain as long term and short term proportionally by using Column 9, Percentage Long Term?

Also, I did misspeak, as I have a couple more complications:

1. I bought then completely disposed of USO during the year. My Sales Schedule does not show an Ordinary Gains column. Column 7 instead reports Percentage Long Term. Am I to assume that there are no Ordinary Gains and that all gains or losses were Capital?

2. USO underwent a reverse split while I held it and I wound up with 1/2 share which my broker gave me as Cash in Lieu <$20. This shows up in my broker statement's Supplemental Information but I can't find where or how it was reported to the IRS. Additionally, the Sales Schedule shows the 1/2 share being sold around the time of the split with the remaining 12 shares sold on the correct date in December. The Initial Basis Amount for the 1/2 share is off by about $1 but for the 12 shares it is way off (1099-B says $418, Sales Schedule says Initial Basis of $432 plus Adjustment of $2 = Cost Basis of $434). Does the Cash In Lieu have anything to do with this and how would I enter these transactions?

Thanks and a Happy Mother's Day to you if you celebrate!

[nexchap]

@Stop-Tax-Co-Lobbying 

---

Is it safe to assume that I can just divvy up Basis Adjustments and Ordinary Gain as long term and short term proportionally by using Column 9, Percentage Long Term?

Yes

---

1. I bought then completely disposed of USO during the year. My Sales Schedule does not show an Ordinary Gains column. Column 7 instead reports Percentage Long Term. Am I to assume that there are no Ordinary Gains and that all gains or losses were Capital?

Correct.  Ordinary Gains don't occur in every partnership.  If they're not reported, you don't have to deal with them.

---

2. USO underwent a reverse split while I held it and I wound up with 1/2 share which my broker gave me as Cash in Lieu <$20. This shows up in my broker statement's Supplemental Information but I can't find where or how it was reported to the IRS. Additionally, the Sales Schedule shows the 1/2 share being sold around the time of the split with the remaining 12 shares sold on the correct date in December. The Initial Basis Amount for the 1/2 share is off by about $1 but for the 12 shares it is way off (1099-B says $418, Sales Schedule says Initial Basis of $432 plus Adjustment of $2 = Cost Basis of $434). Does the Cash In Lieu have anything to do with this and how would I enter these transactions?

The partnership gets its initial basis info from your broker, so there shouldn't be a disconnect when it comes to what you actually spent as a starting point.  But the broker may adjust your purchase downward on the 1099-B for any distributions (which is useless, since it isn't a full adjustment, but also confuses everyone who tries to figure out the number), so that may be part of it.  The 1/2 share accounting may be part of it also.  You'll want to start with your own records of what you spent and work from there to make sure you understand where the different numbers come from.  If you can't, the broker or partnership ought to be able to add guidance.

[-tax-prep-2018on]

Nexchap, 1 additional small (I hope!) questions on this sale of PTP shares thread. . . 

My K-1 Sales Schedule has numbers in Columns 11 & 12, i.e. Cumulative Adjustments to Basis (Adjusted for Bonus Depreciation) and Gain Subject to Recapture as Ordinary Income (Adjusted for Bonus Depreciation). Any idea where these numbers go or how to use them? 

Thanks for any direction on this, 

[Stop-Tax-Co-Lobbying]

Thank you @nexchap ! One more question if I may: On another K-1 I have numbers for 20AH1 (Gross Receipts for Tax Exempt Entities), 20AH2 (Gross Receipts), and 20AH4 (Federal Reg Bonus Depreciation Adjustment for Non-Conforming States). I am not a tax exempt entity and my state is not listed on the State Schedule. Should these numbers be entered somewhere? TurboTax only has 20AH Other Information as an option in its dropdown list.

[nexchap]

@Stop-Tax-Co-Lobbying

@-tax-prep-2018on 

Fed tax rules allow companies to take accelerated / 'bonus' depreciation.  But some states, known as 'nonconforming' states, don't allow that.  So partnerships will give you info on what their K-1 would have looked like without the bonus depreciation.

If you're filing in a state that allows the bonus depreciation, you can ignore this.  If you're in a 'non-conforming' state (you can google to find out), you need to adjust your state return (and before you ask, I'm not familiar enough with the different state requirement to give any guidance on how to do that).

So col 11 and 12 on the sales schedule are restatements to be used if you're in a non-conforming state (your 1099-B adjustments would be different, as would your Ord Gain).  And 20AH4 is an adjustment to be applied to box 1 for a non-conforming state.

[Stop-Tax-Co-Lobbying]

@nexchap Hmm, CA is (of course) a non-conforming state but aside from the previously mentioned items 20AH1-4, there is no Column 11 or 12 on the Sales Schedule. There is a Column 8 on the State Schedule for Bonus Depreciation Adjustment but, again, CA is not listed on the State Schedule.