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

[Willard131313]

They were rolled from another account into a single account and my name may have been slightly mis applied as i have no middle name and a two word last name

[HH_22]

Is there an updated solution for this scenario? I have similar issue. 1099B reporting capital loss (Box B). K-1 schedule showing reduced Cost basis with Cumulative Adjustment to Basis that would result in short capital gain if compared to the sales proceeds from 1099B. There are no ordinary gains reported in the sales schedule. I do see in Part III these info: 5)interest income=1, 11) other income= -420 and 13)other deduction = 5. Not sure if that should be used to calculate ordinary gains.

[nexchap]

@HH_22 Ordinary Gain would be reported on the Sales Schedule, so if there's none there your situation is a bit simpler.  But the basics still apply:

• Enter your K-1, following the interview.  This will let TT handle the K-1 entries and any losses received from the partnership.  On the sale, since you don't have any Ordinary Gains, you'd just enter 0 for proceeds and 0 for basis.
• Your 1099-B was likely code B or E (cost not reported to the IRS), so change the cost so that the correct Capital Gain/Loss is reported to the IRS.

[BarbK]

All long term,  sold all shares on same day.   

Do I choose ETP when entering the sales worksheet information?     ETP was my only purchase back in 2011.

The reason why I ask is because on the K-1 portion,  the 3 existing entities ET, USAC, SUN do not have the disposed column checked.

For suspended losses of the 4,  I have:

ETP: -7316

ET:  -454

Sun: -192

USA Compression: -58

How do I handle the disposition of all 4 so the suspended losses are released?     

Thank you in advance for any guidance.

[nexchap]

@BarbK Sticking to the general principle of handling all the Cap Gain/Loss entries on the 1099-B, and only dealing with Ordinary Gain on the K-1:

• For each of the many ET K-1s, you'd enter that the partnership has ended through a complete disposition.  This will trigger TT to release the suspended losses.
• The ET K-1 should (but might not) break the Ordinary Gain out between the different entities.  On your K-1, it may be in the line 20 codes (maybe AD?).  If it does, you have the Ordinary Gain you need to handle each entity just like any other MLP sale:  0 proceeds, and basis set to the inverse of the Ordinary Gain.
• If ET didn't break out the Ordinary Gain, you could just enter it all on any of the sub-entities.  Its not going to change anything, since its all aggregated again on Form 4797.
• Note that the Ordinary Gain also gets counted when entering the 20Z info (for the QBI deduction).  However its split for the sale is also how you'd report it for that set of interview questions.

I hope that's clear.  When you finally get it done, have a celebration that you'll never have to deal with an ET K-1 again!

[BarbK]

Thanks,  it did split the gain on 20AB  between ET and USAC,  zero for SUN.

TT still wants the purchase / sold dates so I will use my original ETP purchase dates.

Working on it now.

[Nothing_Certain]

Hi, I bought and sold out of two MLPs in 2020 (all short term). I did not see this question addressed in this thread:

Each MLP buy and sell was a single transaction.

On both my Broker 1099b and K-1 have dates that are different for purchase and sale/disposition. The dates are 2 days off: that is, my 1099b date is "June 11" for example, but the K-1 shows "June 13" for the transaction. I am not sure if this is due to security settlement date being T+2, but which date should I use? Should I use different date for 1099 section and different one for K-1? This applies to date acquired (which may not be reported to IRS on 1099) and date sold. Thank you.

[nexchap]

@Nothing_Certain Stick with what the broker supplied.  The K-1 preparer doesn't know anything about your purchase and sale dates:  they get that info from the broker as well.  So something was lost in translation between those two, but the broker info would be the right starting place.

Note that the completely correct thing to do is to notify the K-1 preparer of the right dates.  That's because the allocations they make to you may change with the number of days you were part of the partnership.  They can usually re-issue the K-1 within a day.

[Taxes_are_hard]

This might be a dumb question but if I hold 60 shares of a PTP and did not sell any shares, is there anything I need to do in terms of taxes? From what I can gather only the interest income is taxable unless you sell? Thank you

[nexchap]

@Taxes_are_hard You'll want to enter the K-1 into TT every year, simply so TT can track all the suspended losses and handle them in the year you sell.  TT will also handle most things that need to be reported as well.

After entry, you'll also want to review the K-1 Worksheet in TT (in 'Forms' mode), on the off chance that the Partnership reported some sort of oddball entry that TT can't deal with (e.g., 13K EBIE) and where you have to fill out forms outside of TT.

[Nothing_Certain]

@nexchap thank you for your answer earlier. One final question as your original method has seemed to work very well for me (again, all short term single transaction purchase and sale in 2020). No distributions were received.

In Schedule E, I am seeing the "ordinary business income" of each MLP (it happened to be a loss, but this ends up balancing out forms 4797 and 8949 like your method anticipates) is in "nonpassive income/loss" (column i). On each K1 in Section C, the loss is under "Nonpassive Income and Loss" (column h for me).

Shouldn't these losses be passive for me as a limited partner in these publicly traded MLPs? Why is TT filing them under "nonpassive"? It does not seem to change the overall tax burden that ends up coming out of Schedule 1, but feels wrong. Appreciate your insights.

[nexchap]

@Nothing_Certain My return shows the same thing.  I haven't looked up the detailed IRS definitions, but suspect that the classification from passive to "non-passive" happens when the partnership ends and the losses are freed up to offset any other income you may have.

There are other cases, where you still own the MLP but have a legitimate reason to free up some of the passive losses, where Sched E will show those losses in col g.

[DNAmap]

@nexchap Using your method at the beginning of the message trail, I was able to correct the basis on my 1099-B and get ordinary income onto form 4797. It all appears to have worked so thanks for your help! However, I noticed that the Initial Basis Amount for the mlp on the 2020 Sales Schedule (full sale) is about $2500 less than the Total Cost Basis (around $60,000) from my 1099-B. I used the Basis Amount on the 1099-B to calculate my Total Gain and my Capital Gain, and then to calculate my LT and ST adjustments to basis. My question is whether it is usual to have a significant difference between the cost basis from the 1099-B versus the K-1 Sales Schedule and does this difference have any significance for other numbers on the K-1?

[nexchap]

@DNAmap If I understand the question, you're looking at the column on the K-1 Sales Schedule that says 'Purchase Price' (or something similar) and comparing it to what you're broker listed on the 1099-B for cost basis (even though the broker's cost basis isn't reported).  If I've got that right:

• The K-1 info comes from your broker.  So whatever they report as 'Purchase Price' ought to match what you actually paid.  If it doesn't, you'd want to work from your own records but still probably should figure out why there's a disconnect.
• Your broker's records of what you initially paid should also match your own.  But on the 1099-B they may be reporting a slightly adjusted cost basis.  Because they see one source of adjustments (the ROC distributions) some brokers may reduce your cost basis to reflect that.  Its not much use, since it just gives a confusing number (its not fully adjusted, but it also doesn't match your initial cost, so its confusing).  But that may be why the numbers don't match.  You can verify that by seeing if your total distributions match the disconnect.  You can also check with the broker.

Accounting for distributions is about the only reason I'd expect to see a difference.  If that doesn't explain it, its worth digging into.  It won't really effect anything on the K-1, but it will effect what you ultimately report for Cap Gain and so making sure you've got good data on that starting purchase is worthwhile.

[DNAmap]

@nexchap Your interpretation of my question is correct. When I go back to the original broker listing of the purchases I find that the K-1 Sales Schedule Breakout is close to the actual purchase amounts. The 1099-B purchase amounts are about 5% under the actual amount. Thus, I could use the K-1 Sales Schedule Breakout except that I found the first couple of purchases (out of approx 30 purchases) are either incorrect or missing when compared to broker buy records. I will therefore use actual purchase records to determine the correct purchase price and recalculate LT and ST Basis from there.