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

[nexchap]

@balibill1 -- sorry for the late response (I've been off the grid), but just in case you still need an answer: - On AMT, if the sales schedule reported Ord Gain of 100, and AMT adjustment of -10, you'd report 90 for the Ord Gain in the AMT column. TT will take care of getting it into the correct lines for AMT calculations. - As you noticed, checking off the complete disposition box releases all suspended losses, which usually goes a long way towards covering the Ord Gains. It does this for both regular and AMT calculations. - To correct the Capital Gains, I find the easiest thing is to go into Forms mode, to the '1099-B Wks' for the broker in question. Find the transaction, and change the reported cost. The cost you enter is whatever gives the Capital Gain/Loss you calculate on the Sales Schedule. You can change this directly because these costs aren't reported to the IRS (because the broker has no way to track your actual basis, since they don't receive the K-1 adjustments). Hope this helps.

[BilboRoth]

@nexchap Thank you for all your excellent work here.  Very, very helpful!  I ended up filing an extension and have a few additional questions, please.  I sold all shares of my PTP (held less than a year) in one go:  

(1) TT seems to transfer my K-1 Box 17 code A ("Post-1985 depreciation adjustment") figure to line 19 in Form 6251 ("Passive Activities") instead of the proper line 18 ("Depreciation of assets placed in service after 1986").  Have you run into this?  Is there a way to force TT to move this to the proper line 18?  

(2) My Sales Schedule says I am required to attach what amounts to a two sentence "IRC SECTION 751 STATEMENT" to my return.  Have you dealt with this before? If so, how?

(3) On Form 4797 Part II line 10, my Ordinary Gain is reported by TT as simply "From K-1" with only the Gain stated.  A tax guy I spoke to felt that I needed to fill in all the fields on this line (dates, sales price, depreciation, etc).  I haven't found a way for me to enter the fields on my Mac version of TT Permier.  Thoughts?  

Again, many thanks for what is becoming a classic post on MLPs!

[nexchap]

@BilboRoth:  Happy to help.  I figured a lot of this out using the forums, so am just returning the favor.  On your questions:

(1)  I'm not an expert on form 6251, and go strictly by what TT tells me in their on-demand guidance.  In forms mode, if you right-click (windows -- use whatever the Mac equivalent is) on any field there's an option for "Data Source".  Clicking that will give you info on where TT thinks the data for that field should come from.  Looking at line 18, it pulls from the 6251 Wksh, line 5.  And if you look at the values that feed into line 5 you'll see that its the sum of line 1,2, and 4.  Lines 1 and 2 are just for non-passive values.  And line 4 is for "an activity for which the partnership interest basis limits apply, for an activity in which the taxpayer is not at risk, or for a tax shelter farm." (this comes from right-click and choosing "About AMT Worksheet...").  So for my MLPs, TT seems to be handling it correctly by routing the info through a different part of the Worksheet in the 'Passive' section.  But if you feel its not right for you, it looks like values could be entered onto line 4 to flow through to line 18 (though you'd have to back that amount out of the next 'Passive' section on line 3).

(2) In Form mode, TT offers a "Blank Form".  I use that to type in the IRS 751 info (and also the IRC 754 info when its required).  Unfortunately, that form isn't submitted when you efile.  The only advantage to using it is that it keeps all relevant return info in TT and part of the same file.  There is no way to efile and also include the 751 info.

(3) 4797 is just a summary form, pulling from various other areas of TT (you can see this with the same "Data Source" trick).  If you have the information needed to populate line 10 (I've never seen a MLP K-1 that provided it), and feel you need to, you'd have to remove the info from your K-1 and find the appropriate worksheet to enter it onto.  I've never done this.  Note that the assets that produce the Ordinary Gain reported by the MLP have nothing to do with the dates you purchased or sold the MLP.  The MLP computes it (using every asset they own, its fair market value on the date you sold, any depreciation they've taken, etc) and provides a summary number to you.

[BilboRoth]

@nexchap Thank you kindly for your help!

[balibill1]

@nexchap finally getting around to completing my taxes.... one issue with the mlp sale is that while treating the sale as a final k-1 sale / complete disposition did release the all the suspended losses more than covering my ordinary gains for my federal taxes. For some reason it does not seem to have the same effect on my California return in TT. It just seems to recognize the ordinary gain part and ignores the realsed losses...  Any thoughts or solutions to this dilemma.  Also the release of the losses seems to have been applied to all my income not just my MLP gains... is that correct? Thanks again for your help....

[balibill1]

@nexchap finally getting around to completing my taxes.... one issue with the mlp sale is that while treating the sale as a final k-1 sale / complete disposition did release the all the suspended losses more than covering my ordinary gains for my federal taxes. For some reason it does not seem to have the same effect on my California return in TT. It just seems to recognize the ordinary gain part and ignores the realsed losses...  Any thoughts or solutions to this dilemma.  Also the release of the losses seems to have been applied to all my income not just my MLP gains... is that correct? Thanks again for your help....

[nexchap]

@balibill1 -- on your second question:  yes.  On a final sale all suspended losses are released and can be used to offset any income.  On the CA return, sorry but I'm not familiar with how CA works, so don't know if the lack of effect is TT related or the correct result given your tax situation (e.g., if you're bumping into CA AMT, the losses might not be working because AMT is offsetting them).   

[aux2511]

@nexchap & @tnguyen5  - I found that the "Ordinary Income" is somehow transferred to becoming an amount in "Sale Of Business Property".  I was tweaking the amount of "Ordinary Income" in the K-1 interview; and, then I saw the change in the "Sale of Business Property" amount.
  Thank you for your previous question, tnguyen.  I really appreciate your answers, nexchap, for using this thread dealing with a sale.
  Likewise, 2017 was for me a "Complete Disposition" of a "Publicly Traded Partnership" (MLP) and "This Partnership ended in 2017".  I bought and sold my shares for a short-term loss in 2017.  In addition, referring to, "...AND it will create a 1099-B for the cap gain/loss portion of the sale....", I did not import the broker's 1099, so I just followed the K-1 interview prompts. Nexchap, your directions have fit my situation almost exactly.
  I suppose the push of that amount of "Ordinary Income" to "Sale Of Business Property" is not expected?  What do we do to fix it?
  Many thanks for your help

[aux2511]

@nexchap - Oops - my bad - didn't know if my above comment would reach you. . . .

[nexchap]

@aux2511 -- the Ordinary Income went where it's supposed to.  If you look at the Sales Schedule you received, at the bottom of the "Ordinary Gain" column there's usually a row for "References", which will show "Form 4797, Part II, Line 10".  That's telling you where the Ord Gain amount is supposed to show up in your return, and that is the Sale of Bus Property form.  Turbotax takes care of that automatically.

[renos]

Has anyone had to deal with a complete sale of an MLP that requires more than one K-1? For example, MLPs that have numbers in Boxes 1 and 2, requiring a separate K-1 for Box 2 (the rental income)? Or a "tiered" MLP like Energy Transfer Equity or Williams Partners, which have a number of sub-partnerships, each requiring a separate K-1?
Do you go through the cost basis adjustments outlined by nexchap above for each K-1? Or do you go through the above steps for just the "parent level" K-1, and leave the inputs for sale price, partnership basis, etc on the "sub-level" K-1s blank?
Thanks!

[nexchap]

@renos:  You keep all the sale info at either the main K-1, or on the 'box 1' K-1, leaving the sales stuff (price, basis, gain, etc) blank on the others.  

[flroots]

Hello nexchap,
Does your solution still apply to 2018 Turbotax Premier (CD/Download version)?  Just wondering if they've made changes since your original post. My MLPs were bot and sold during 2018. Thanks

[nexchap]

I haven't started my 2018 taxes yet, so I'm not sure.  I'll update this if something has radically changed, but that won't be for several weeks.

[flroots]

I just imported my first k-1 via txf file without issues. I do have a 1099-B showing a short term gain for the same MLP. Now, how do I determine if there's double counting? Under TT forms I've viewed the Schedule K-1 (form 1065), but I don't know where to look. Any clues would be appreciated.

Update: I did compare Sch D gain/losses before and after importing my first two MLP k-1's and no changes. Does this imply that there was no double counting?