Help filling out Sale Information for Final K-1

[mellynlee]

@Rick19744  I noticed that you have answered various questions on K-1s, so hoping you (or someone) can help me! I tried asking this question yesterday, along with photos of my forms, but nobody has answered, so I'm trying again.

Background: We received a Final K-1 because we bought and sold stock in a publicly traded company (short term capital loss for 2024). When entering this K-1, I answered the TT questions as follows:

- This is a publicly traded partnership AND This partnership ended in 2024.

- Partnership Disposal: Complete disposition

- Sold Partnership Interest

Here is my K-1, and Sales Schedule information (I hope this is legible):

K-1K-1 supplemental infoSales Information

I then get a screen for 'Enter Sale Information'.

My question is - How do I fill this out?

Regular Gain or Loss

Sale Price: From looking at other posts about this, it sounds like I should put 3602 here. This is equivalent to 20AB Section 751 Gain. Do I ignore K-1 Box 1 of -1964 (Ordinary business income/loss)? And what about the actual sales proceeds of this stock, which was reported on my 1099B?

Selling Expense: From other posts, this should be 0?

Partnership Basis: Should this be the sum of column 7 in the Sales Schedule (Total Adjusted Cost Basis): 56806; Another post suggested this should be 0?

Ordinary Gain: This is 3602 (Section 751 Gain) if I put 3602 as Sales Price and Selling Expense and Partnership Basis are both 0.

1250 Gain: Leave this blank? I don't see any references to 1250 Gain anywhere

AMT Gain or Loss section should be SAME as Regular Gain or Loss?

I'd appreciate any help/advice...thank you!

[Rick19744]

Before I provide any additional details, did you receive any proceeds upon selling this PTP?

Appears you did as you indicate you received a 1099-B.

[mellynlee]

Hello,

Yes, as reported on our 1099-B, our proceeds from the sale of this stock was: 55841

However, our 1099-B cost basis was: 59060 (also shown in K-1 section L Beginning capital account)

Which gave us a short term loss of: 3219

[Rick19744]

Got it.  

• Just enter the K-1 information as you normally would
• Make sure you indicate PTP and final; which it appears you have done
• Make sure you don't double up on the disposition component
• When entering the K-1 information, since you indicated you sold the units, there will be questions regarding your cost basis and selling price.  
  • Your cost basis is what is indicated on the K-1; $56,806
  • The 1099-B hasn't taken into account the current year activity which impacts your cost basis
  • Then the selling price is the $55,841
• When entering the above, this will provide an ordinary loss of the $2,254 from the K-1 items and then a short term capital loss of $965.  As a result you end up in the same place ($-3,219) except for the character of the items; which is to your advantage.
• As a result of entering this information in the K-1 section, you will need to make some adjustments on form 8949.
  • To avoid a matching issue on the 1099-B, enter the amounts as reflected, except you will need to make an adjustment to zero out the K-1; since it is being reported from input in the K-1 section.
  • Form 8949 column f should reflect code B.
  • I'm not sure if your 1099-B indicates the cost basis was reported to the IRS.  As a result, column e and g need to be adjusted accordingly.
  • The goal when entering the 1099-B information is to arrive at zero gain or loss since the loss will already be reported by TT from the K-1 section.
• At the end of the input, the 1099-B gain or loss should be zero and the K-1 input should flow and result in a $965 short term capital loss.
• The remaining $2,254 loss amount will be reported in various sections of the tax return.

[mellynlee]

Thank you for your reply,

However, I just want to make sure I am getting what you mentioned in this paragraph:

• When entering the above, this will provide an ordinary loss of the $2,254 from the K-1 items and then a short term capital loss of $965.  As a result you end up in the same place ($-3,219) except for the character of the items; which is to your advantage.

This is what I entered in the Sales Information section (as you suggested):

Sales Information

Was I supposed to put anything into "Ordinary Gain"? (In Sales  Schedule, Column 8 - Section 751 Gain, Ordinary Income shows a sum of $3602) Or do I leave it blank as shown?

If the above entries are correct, the next page in TT shows:

Investment Loss on Sale

This shows the short term loss of $965 as you suggested. However, where can I find the "ordinary loss of $2254"?

If I continue through the TT questions, I enter all the information as shown in my K-1, and then I get to yet another screen. However, before I ask questions on that screen, I want to make sure the above is correct so far.

Also, in your next comment about making some adjustments on form 8949, do I need to go into the Forms mode of TurboTax, and make your suggested adjustments to the forms? Do I do this AFTER I finish going through all the interview questions of TT?

Thank you!

[Rick19744]

Follow-up response:

• The $2,254 amounts will be all over the place
  • $1,964 will be reflected on Sch E
  • There will be a Section 1231 loss reported on Sch D
  • There will be investment interest expense reported in the return
  • Some interest income
  • Numerous items that are reflected on the K-1 will be reported in numerous places in your tax return.  That is why I noted to enter the K-1 information as reflected into TT
• Yes.  Enter the form 8949 details after completing the K-1 section

[mellynlee]

OK, thank you for your reply. I will assume that what I entered into the Sale Information page of TT is correct.

After I enter all the information from my K-1 into TT, it notes that I have Section 199A income. I then selected:

The income comes from the partnership that generated this K-1

I assume that is the correct answer? This is a PTP, not sure what a REIT dividend is, so I didn't choose that selection.

After hitting Continue, I get the following screen:]

199A income

I entered the Ordinary business income as -1964, which is in box 1 of my K-1 (Ordinary business income)

I entered 1231 gain as -194, which is in box 10 of my K-1 (Net section 1231 gain)

Do I need to fill in any of the other boxes? I have various numbers listed on my K-1 (in photos above), but wasn't sure if I needed to list those here.

Lastly, in response to your statement of:  Enter the form 8949 details after completing the K-1 section

When I switch to the 'Forms' display on TT, it shows Form 8949, but I cannot edit it. Am I supposed to be able to edit it somehow?

Thank you!

[Rick19744]

A couple things:

• You don't edit the form 8949.  You enter the 1099-B information described previously as if it was a separate transaction.  This is where you need to make sure this information nets to no gain or loss as noted  previously.
  • Leave the TT generated form 8949 as it is.
• I missed your question on Section 751.  Yes, you need to enter that on the one screen for the sale information.
  • This actually complicates the numbers somewhat.  
  • The Section 751 gain recharacterizes the overall gain or loss.  In your case, the Section 751 causes $3,602 of ordinary income.  That will then cause your overall capital loss to be $4,567.  So once you enter the Section 751 into TT, make sure the new ST capital loss figure is $4,567.  This then "nets" to the same overall loss of $965 (3,602 - 4567 =$965)
  •  

[mellynlee]

OK, so should I change the Sales Information page to be like this?

Sale Info

Sale Price = Gross proceeds to stock sale as listed on 1099B

Partnership basis = Sum of column 7 (Total adjusted cost basis) in Sales Schedule of K-1

Ordinary Gain = Sum of column 8 (Section 751 Gain) in Sales Schedule of K-1, ALSO equal to Box 20AB of K-1

If I enter the above numbers, the next page shows a Short Term Gain of -$4,567

Is this section filled out correctly?

---

Also, I didn't see your answer to my question about filling out the form titled "We need some information about your 199A income" (Please see my previous post with the photo. Do I need to fill out any of the other income fields? Was everything on that form filled out correctly?)

Thank you!

[Rick19744]

Your sales information results in the correct capital loss that I noted after adjusting for the Section 751; so this looks good.

Add the $3,602 Section 751 amount to the Section 199A screen on the "other income / loss" box.

[mellynlee]

Thank you! I've made it through the K-1 now.

However, I still have questions on your statement here:

You don't edit the form 8949.  You enter the 1099-B information described previously as if it was a separate transaction.  This is where you need to make sure this information nets to no gain or loss as noted  previously.

I guess I'm not sure how to enter the 1099-B information. Are you saying I need to "make up" a new transaction to zero things out?

Here is what the Form 8949 looks like now:

Form 8949 Box B checked

The above shows the 4 (Suburban Propane) stock transactions made from the 1099-B. Box B was checked (short term were basis was not reported to IRS).

Another Form 8949 was also generated - I assume from the K-1:

Form 8949 Box C checked

This Form 8949 has Box C checked (short term transactions not reported on 1099-B)

Can you explain what else I would need to do?

Thanks so much!

[Rick19744]

Those screen shots are helpful.

• Since the 1099-B indicates that cost basis is not reported to the IRS, go in and edit the 4 sale amounts.
• Adjust the cost basis to equal the proceeds reflected on the 1099-B so everything nets to zero
  • $9,409 proceeds and $9,409 cost basis
  • $18,673 proceeds and $18,673 cost basis
  • do that for the other two sale amounts
  • this will then only generate one overall loss, which will be the $4,567; don't change this entry as it is exactly what we want it to be.
  • Now there is no duplication

[mellynlee]

Thank you SO much for your help! I could not have done this without you.

One last question (I hope!):

I received IRC Section 751 Statement along with my K-1 which states: if you sold units during 2024 and characterized a portion of the gain as ordinary income, you must attach this IRC Section 751 Statement to your 2024 tax return.

TurboTax did not mention anything about this 751 statement. Can I assume that because my transactions resulted in a net loss (not any gain), that I will not have to attach this statement to my tax return? As you can see above, my Sales Schedule shows $3602 in column 8, which is Section 751 Gain, Ordinary Income. However, my overall transactions are a loss.

Thank you!

[Rick19744]

Partnership transactions can get complicated very quickly.

Yes, you do need to include a Section 751 statement with your tax return.

Sometimes a partnership K-1 will provide some language.  If this was not provided, then see below.

I believe you can include a pdf statement and still efile your return.

The statement should include the following:

• A heading with your name, tax return form (1040), year and your SS# (I realize this will be duplicated below, but the purpose of this heading is in case this pdf gets detached from your tax return in any IRS review process)
• A subheading that states "Statement for Transfers or Distributions of Interests in Partnerships Holding Section 751 Hot Assets in accordance with Regulation Section 1.751-1(a)(3)"
• Under that list your name and SS#
• Then list the sale date and the partnership name and EIN
• Gain on sale attributable to Section 751 property (which is the $3,602)
• Capital loss on sale (which is the $4,567)

There is no standard format for this disclosure as long as it provides the information required by the regulations; which the above is in compliance.

[mellynlee]

OK, I received the following piece of paper with all my K-1 papers:

IRC Section 751 Statement

This seems to imply that I need to physically send this piece of paper into the IRS along with my tax forms. And that the information needed by the IRS are available from the GP?

Does this mean I just need to send in this piece of paper? And if so, is there a way to send it, AND e-file?

Thank you!