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

[ssmith2]

NexChap-Thank you very much for your super-quick response. I will call them in the morning to see if they can do this for me. I just wanted to confirm that I am not being unreasonable to ask. I suppose there is no other way to determine the actual effect that may occur without them going through the process to reissue the K-1.

[nexchap]

Correct.  There's no other way.  Its also a routine request.  They may require you to fax the instructions to them, but beyond that most MLPs have the re-issue automated.

[ssmith2]

Sounds great, nexchap. Thank you very much.

[jasonx-1011]

Hi, nexchap
I got a MLP final K-1, because I sold all the shares last year (Publicly traded partnership). I am using online version for 2017 return, and I would like to use your method, since my broker reported the sales on it's 1099-B.
However, during the K-1 interview, what should I do to get the "ordinary gain" section you mentioned in the post.
In the very begging, TT asked the following question:
Describe the Partnership
[] This is Publicly traded partnership
[] ...
[] This partnership ended in 2017.
[] ...

If I click "This partnership ended in 2017.", then it asked "how you disposed of this partnership/LLC?"
[] No entry
[] Complete dispostion
[] Disposition not via a sale
[] Sold and am receiving payments

Basically, I do not know how to get "ordinary gain" section you mentioned.
Could you please help me out?
Thanks!

[nexchap]

You'd check off "complete disposition", then "sold partnership interest" on the next screen.  That will bring you to questions regarding the actual sale.

[ssmith2]

nexchap-I'm back with my question about a partial sale of units in an MLP. I decided I better ask my tax accountant before getting a revised K-1. He seems to believe it doesn't make any difference to have the K-1 re-stated because he used the correct acquisition price for the shares we sold per the broker's statement. He said the large tax hit came because of the adjustment to the basis resulted in a large ordinary gain. The gain he booked on the return is the same as listed on the original K-1. Am I just not understanding a basic principal of MLPs? I would assume that the basis adjustment figures and resulting ordinary gain would be quite different for a restated K-1 showing sales of 6-yr.-old units )as opposed to the current incorrect one showing sale of the 16-yr. old units). He seems to be indicating that the basis adjustment wouldn't change. Is it the case that the amount of distributions attributed to recent shares are the same as the total distributions or something? I just don't get this at all.

[nexchap]

I've dealt with roughly 20 different MLPs, and every one of them has Ordinary Gain and Adjustments to Basis that vary by lot.  Older lots have much higher adjustments, and much higher ordinary gain, then newer lots.  Its possible your MLP is different, or that your accountant just doesn't understand this space.

[ssmith2]

I'm thinking the latter...I'm bothering you again just to check that I'm not missing something. Okay, I'll take another run at him, but I think he is starting to look at me like I have two heads. Thanks for your help!

[gaili-zhao]

nexchap,  Your two step process is very helpful.  But my 1099B shows that the 1099B is already reported to IRS.  Can I still change the cost basis listed on 1099B?  Is there other workaround?  Thank you.

[nexchap]

Your 1099-B should be broken into different codes (A, B, C, D, E, F).  You may not have all of these, but PTP transactions should show up as code B or E.  Those mean that the revenue was reported to the IRS, but the cost basis was not.  If that's the case, you can change the basis to the correct number and there's no reporting issue (in forms mode, I go to the 1099-B worksheet and enter the correct number on line 7b:  'Corrected basis, if applies").  If your broker reported the transaction as code A or D (both revenue AND cost reported) you should see about getting a correction from them.

[gaili-zhao]

nexchap,  Thank you for your quick response.  My PTP is short term and my broker E-Trade  reported on 1099B as Box A (Basis reported to IRS).  I will try to reach E-trade to get a correction from them.  Thank you very much for your help.

[gaili-zhao]

nexchap, I talked to E-Trade TAX center and they agree that they should report the PTP 1099B as Box B.  But they do that only if the LLC tells them K-1 will be generated and reported to IRS.  In my case, the LLC did not tell E-Trade about the K-1 form.  I understand that if E-Trade does not send 1099B  correction to IRS, and if I use your 2 steps process, there will be a difference between the basis of my schedule D 8949 form and IRS copy.  But I am not sure if this will cause any problem.  In your opinion,   do you think I can still use your 2 step process or there is other workaround?  Thank you so much.

[nexchap]

The discrepancy might cause the IRS to send a letter asking why your return doesn't match the 1099B from E-Trade.  But that would be easy to explain, and would be resolved when you send your explanation back.  If you print and mail your return, you can include an explanation statement with the return, which would also take care of it.  I'm not sure if there's any way to do that if you efile.

[gaili-zhao]

nexchap, I got it.  Thank you so much. I really appreciate your help.

[hirustler]

nexchap. Thanks for your super help - sale of MLP - "This partnership ended in 2016" instruction" on the describe the partnership screen. Not obvious to me and many others. Was going thru hell to get this done.  TTax should make this much more obvious. 5 stars to you.