How does Turbotax calculate line 2g of Form 4797 using the K-1 Schedule?

[georggeorg]

Turbotax does not explain how it uses the K-1 Schedule to create the number for line 2g of Form 4797. I am being audited and the auditor asks me to explain the Turbotax result.

[georggeorg]

Hello Champ:

Thank you for your answer but it does not help because Turbotax does not populate lines 2d, 2e and 2f, nor does it state explicitly how it derives the results shown in line 2g.

Let me be specific.  I have 31 Master Limited Partnerships, mostly pipeline companies.  All have K-1 Schedules that were put into Turbotax.  Each Schedule has at least 20 lines and each line has multiple sublines that have the K-1 Schedule data.  Form 4797 can utilize data in several of the sublines in order to construct the entries in lines 2d, 2e and 2f.

Now, let me show you what Turbotax displays for the entries in Form 4797 on my Tax Return.

(2a) Descritioon of Property          (2d) Gross Sales Price ....            (2g) Gain or Loss 

        From PTP                                           Blank                                              1,345 

        From K-1                                             Blank                                            -7,418

In summary, only lines 2a and 2g are populated.  In addition, the Turbotax writeup explaining how to derive  2g from K-1 Schedules is very general and not helpful.

I hope I have explained the problem.

Regards,

George

[georggeorg]

Hello Champ:

Great!!

This is a defficiency of TurboTax.  It should be easy to correct by allowing user to go deeper and see for each MLP the data for 2a, 2d, 2e, 2f and 2g that were used to derive the summary results displayed for 2g.

Regards,

George

[nexchap]

@georggeorg It would obviously be nice if TT gave you a drill down ability that actually showed the numbers.  But since it doesn't, there's really no simple short-cut.  There are many possible places TT could be grabbing values for that entry (right-click, choose data source, and it'll show you every possible feed), so here's a couple approaches:

If you don't have any of the forms mentioned on that form except K-1s, then "Schedule K-1 Partners Share of Income, Credits, Deductions, Etc., line 10, or Schedule K-1 Shareholders Share of Income, Credits, Deductions, Etc., line 9," would be an obvious places to look, and see how close they get to the total you're looking for. 

An additional way to work it out is to make some obvious changes in any number you suspect and see whether it ripples through to 4797.   For example, change a $17 entry to $500,000.  If 2g jumps by $500k, you know the number is part of the equation.  Obviously clunky, but doing that in a few spots will likely give you the ability to figure out where the numbers came from, and it can go pretty fast in 'Forms' mode.

Finally, you can always delete a K-1, see how the number changes, and back it into that way.

Sorry I can't provide a better answer to what ought to be a simple problem.  The above is just what I've gone through on my own returns when trying to figure out this exact same sort of thing.

[Mike9241]

usually the 1231 gain line 10 of the k-1

if box D on the k-1 is checked the description will be from PTP otherwise from k-1.

the k-1 has no details for columns b through f only the net is reported on the k-1

no "capital gain" on line 11 should transfer to the 4797 

you are correct Turbotax just transfers totals to the 4797. not even a calculation worksheet to show how multiple k-1s add up to the total.

i think better form would be to list each k-1 amount separately with the name but this is the way it's been doing it for decades.