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.