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JAAA4
Returning Member

Final K-1 Form 1065 Reporting Process

Help! We received a Final K-1 (Form 1065) from a PTP and we are confused on how to properly report this in TT. 

The units (shares) were sold at a profit in 2022 and are being reported on 1099-B so we don't want to have it counted twice. We have looked through the other posts about this and are still confused. 

 

So far, we checked that it is a PTP and checked that the partnership ended in 2022.

 

Next, in "Describe Partnership Disposal", we are not clear on whether to check "No entry" or "Complete disposition" so we don't duplicate the information that is being reported on the 1099-B. However, we want to make sure that this Final K-1 is reported properly. In other posts, sometimes it is suggested to pick "No entry" while others say to pick "Complete disposition." Please clarify which to pick.

 

Can you please help us with the steps we need to take to report this properly in TT as it is not very explanatory.

 

Thank you very much!

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2 Replies

Final K-1 Form 1065 Reporting Process

MLP and PTP reporting k-1 and 8949

 

Enter the k-1 info

Check the PTP box

If total disposition proceed as follows:

Check final K-1 (s/b marked on actual k-1)

Check sold or otherwise disposed of entire interest

 

On the k-1 disposition section for sales price use the ordinary income. you’ll see a column with the “751” or the words “Gain subject to recapture as ordinary income” or similar wording. This info comes from the supplemental sales schedule that should have been provided. Its also now on the k-1 box 20AB - no 20AB then this sales price is zero

Cost is zero

Ordinary income is the sales price.

This info flows to form 4797 line 10 and is taxed as ordinary income. This step is necessary so any suspended passive losses are now allowed

**********************

Now for the 8949.

The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct. The correct tax basis is:

What you paid originally, should be the same as what is on 1099-B as cost,

Then there is a column on the sales schedule that says cumulative adjustment to basis. If it’s positive add it to the original cost. If it’s negative subtract the amount. 

Finally add the amount of ordinary income reported above, if any.

The result is your corrected cost basis for form 8949.

******

Some other things. Look at lines 20AB. That number should be added to the ordinary income above for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.

JAAA4
Returning Member

Final K-1 Form 1065 Reporting Process

Thank you for your reply. 

 

Firstly, do I check "Complete disposition" in the "Describe Partnership Disposal" section?

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