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

[bobby46]

@nexchap this requirement about sales schedule ( part) 2 is for many states. It says on my k1 for spectra. - Use for state tax return only if you reside in one of the following states - Arkansas, DC, Florida, Georgia. Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Mississippi, Michigan, Montana, Nebraska, ew Hampshire, New Jersey, New york, north carolina, oregon, Pennsylvania, rhode island. The cumulative adjustments to basis and ordinary gain / loss numbers are different from the federal part of the sales schedule. Not able to find any info on turbotax NY download or online prior questions asked at Turbotax or otherwise. any thoughts on how to approach this. Thanks a lot.

[mmittanck]

@nexchap :   Yes I see the numbers as you refer to them in the forms.  Yes that Ord Gain shows up as a Cap Loss and under a code F in 8949..  I was wondering about that.   Would explain a little more by what you mean,  "This is not necessarily a problem, as long as you make sure that the combination of this new TT creation plus your 1099-B form add to the right number." ?   
Do I still need to " report the sale as normal on Schedule D, checking the appropriate "Reported on 1099-B" Box A or Box B." ?   I cannot seem to find a place on Sch D to do this, report as normal and check appropriate box A or B.

[nexchap]

@mmittanck:  Let's say you do the math on your K-1 Sales Schedule, and determine that you have a Cap Gain of $500.  If TT creates an extra 8949 with -$100 on it, then your 1099-B (from your broker) needs to have $600 on it to get to the correct total of $500.

What TT is referring to with the "box A or B" stuff actually comes from the 1099-B.  Every 1099-B (usually, you can import all these from your broker, and easily find them in Forms mode, will have a box A, B, D, or E checked.).

[nexchap]

@bobby46:  The overall issue is that some states don't recognize Fed Bonus Depreciation (they're considered "non-conforming"), so if your PTP takes it you have a different basis for Fed and State purposes.  This also means you have different suspended losses, and when you sell you have different "Cum Adjustments" and "Ordinary Gain".  TT doesn't handle that automatically.  They may offer a way to make the adjustments in the State interview process.  Or there's a way to do it in Forms mode for the state (I don't know the NY State setup).  But you're looking for a couple things:
- Any PTP that uses Fed Bonus Depreciation will report, in the line 20 codes, something like "Bonus Depr Adjustment".  That number gets used in the State return every year to adjust your carryover losses.  The sum of all those entries should match whatever the difference in "Cum Adjustments" is when you sell.  Somewhere in the TT K-1 worksheet for the state return there ought to be a line where you can make adjustments to whatever is brought in from the Fed form.  It might even be labeled something like "Bonus Depreciation Adjustment"
- In the year you sell, the Ordinary Gain you recognize in the State has to be adjusted per the Schedule you get.  It usually goes down.  You just have to find the spot in your state forms where it shows the 4797 carryovers and make the adjustment..
Sorry I can't be more specific about how to address.  Its the joy of living in a non-conforming state, and another complication with PTPs.

[mmittanck]

@nexchap :  thanks for the help.  I think just one more question.  When I do the math from my K1 Sales Schedule to determine Cap Gain, is it simply a matter of Sales Proceeds/stock selling price minus original Purchase Price?  

[bobby46]

@nexchap Thanks  for the prompt reply. My spectra MLP was held for less than a year from 5/18 to 12/18. so there is no prior year stuff. Yes this is a tough one. Form 225 is mentioned for NY state for these subtractions/additions. Not sure if thats the right one to use. Still searching.

[nexchap]

@mmittanck: No -- the Sales Schedule fine print walks you through the formula.  Your basis is what you paid less all the adjustments.  Your total gain is your Proceeds less your basis.  And your total gain is then split between Ord Gain and Cap Gain.

[mmittanck]

@nexchap :  Sorry guess I have another question.  When I study the Sales Sch, I understand the formula.  Cap Gain would be Sales Proceeds minus adjusted cost basis (col 6).  But the number I get seems way to high to me.  In round numbers my situation is:  Sales Proceeds=$22,000, Purch Price=15,000, Cumul Adj to Basis= -17,000, Cost Basis= -2,000, which all yields a cap gain of 24,000.  This seems way too high since I only had 6,000 cash gain on stock sale, 4,000 in partnership distributions and 12,000 in passive losses over a three year period.  This is for Archrock Partners, a PTP MLP.  

[nexchap]

@mmittanck: From a math standpoint, things look close to correct.  You got $7k from the sale (22-15) and $4k in distributions, so $11k.  You get to deduct the passive losses, so you're paying tax on $12k (24-12).  Pretty close.  I bet if you look at exactly how your basis changed each year that $1k gap would go to $0.

[bobby46]

@nexchap Here is my K1 situation comparing federal and state taxes situation.
for state taxes - 82 ( cost basis) - 6 ( cumulative adjustment to basis from k1 sales schedule) + 5 ( ordinary gain from sales schedule)= 81 is my adjusted basis for the state ( NY).
For federal taxes - my basis is the same . 82 ( cost basis) -8 ( cumulative adjustment to basis), + ordinary gain 7 = 81 ( adjusted basis for the federal taxes). As you can see the cumulative adjustment to basis and ordinary gain are different in federal and state taxes but they lead to the same final adjusted basis for both federal and state taxes.
Since the final sale price ( per the brokerage ) - this adjusted basis is the profit. So thats the same for both state and Federal taxes. Do you think anything extra needs to be done for the state taxes as that profit in the federal taxes should have flowed to NY taxes as well and accounted for in the state taxes. Any thoughts? Thanks.

[nexchap]

@bobby46:Let me preface this by saying "This is not tax advice, financial advice, legal advice, or life advice.  This is just words written by an anonymous stranger who, for all anyone knows, could be a 12-year-old Golden Retriever."  With that out of the way, I can't imagine that the NY tax authorities will care -- you're paying the correct taxes, and the adjustments involved are nearly rounding errors.  If you enjoy puzzles, or plan to keep investing in MLPs, or are snowed in by the April weather, you might still enjoy finding the spot on the forms where you'd put the offsetting entries.  But otherwise, it doesn't seem like a priority.   

[rolanddawson2500]

nexchap:  "I'm curious if you track it down..." Sorry, I thought I had replied to you on this, but I don't see it, must have failed to complete the post process. The difference between correcting the 1099B to Zero and using the interview form and the method you proposed is on the 4797, Part 1 Line 2. (Either way comes up with correct capital gains on a 100% sale, Long Term.) The difference on the 4797 is 54 dollars (for reasons I do NOT understand), which when you trace back, increases my tax obligation by $41. It is small I would normally just ignore it. However, while retrying to trace it through I found an input error which was material. (On the interview form, they ask for the "1250 Gain". I used column 12. I now see that is for State Taxes. I assume the correct number for 1250 Gain is the one in Column 8, "Amt Gain/Loss Adj,"for form 6251 Line 2K for the Alt Min. Tax? This is material, leads to a lowering of taxes by enough to file an amended return, after I wait out the return of capital amended 1099's I always seem to get.) Again, thanks for "moderating" this very helpful thread. (And correct me if I stated the 1250 gain incorrectly above.)

[martin3]

Sorry if this is redundant but I dont see my exact question.  I sold all my MLP shares. Cost basis was NOT reported on the 1099. If I use the k-1 Sales Schedule Cost Basis (#6 on the TC Pipelines schedule) do I also enter the adjustment for Ord Income on Form 8949 Column G? Or do you only do that Adjustment when the 1099 had reported a basis to be adjusted?  I dont understand it all well enough to figure out what the outcome should be so i can't double check the result. Thanks

[nexchap]

@rolanddawson2500: Why do you think you have any "1250 Gain"?  I've always had Ordinary Gain (which is adjusted in the AMT column by the "AMT adjustment" on the K-1), but never had an MLP identify any 1250 Gain.

[nexchap]

@martin:  Before you enter anything, you want to work through the Sales Schedule included with your K-1 to determine exactly what your Cap Gain/Loss should be.  That way, however you do the data entry, you'll be able to verify that you got the right number onto your 1099 and Sched D.  As for filling out the 1099, you say your cost basis was not reported (which is normal), but I assume you actually have a 1099-B from the broker that shows your sales proceeds.  The simplest thing to do is to just enter the correct cost basis on that 1099-B in "Forms" mode.  The correct cost basis is just "Sales Proceeds" - "the Cap Gain you calculated on the Sales Schedule".

Note that if you don't have any 1099 from the broker, so you'll need to create one, AND all your TCP holding were short or long term, you can look TT do the work.  In that case, your "basis" would be what you paid adjusted for the "Cumulative Adjustments" provided on the Sales Schedule.  TT will split that between Ord Gain and Cap Gain, create a 1099-B, and no further adjustments will be necessary.