In Part II, the K-1 form has all 0% in section J. Section K1 has nonrecourse beginning 3 and ending 7, the rest blank. K2 is checked. Section L has 25, 0, -3, 0, (2), 20. Section M has "No" checked.
you can ignore this section completely. while Turbotax allows you to enter this data it's not used for anything nor is it transmitted to the iRS
In Part III, 1 Ordinary business income (loss) is -3.
enter this
Section 17 AMT items has -1.
enter this
Section 19 has A and 2.
you can omit this not used
Section 20 has A and 0, then N and 1, then V and -3. Every other section is either 0 or blank.
you can omit these not used
the stock basis on the 1099-B is incorrect because the broker does not track your tax basis. What was reported as cost usually is what you paid originally.
as part of your k-1 package that you'll need is a supplemental sales schedule that gives the details for properly reporting the disposition
detail as to reporting complete disposition of all shares. (if this is the first and last year you held the stock you can leave off the AMT amount. Then the AMT and regular gain/loss on disposition would be the same.
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MLP and PTP reporting k-1 and 8949
Please follow these instructions. Incorrect entries can result in entering the sale twice or otherwise incorrectly. Also see the sales schedule that was included with the k-1
Enter the k-1 info
Check the PTP box
If total disposition proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of entire interest
On the k-1 disposition section for sales price use the ordinary income (sometimes you’ll see a column with the “751” or the words “Gain subject to recapture as ordinary income” or similar wording. This info comes from the supplemental sales schedule that should have been provided. Its also now on the k-1 box 20AB - no 20AB, no ordinary income column then then sales price is zero. The numers I’m using represent the line numbers in forms mode (desktop only)
5. Sales Price = line 20AB (1065 k1)
6. Selling expenses = 0
7. Basis = 0
8. Gain is computed and should be same as the sales price.
9. Ordinary gain = enter same as sales price
This amount flows to form 4797 line 10 and is taxed as ordinary income. This step is necessary, so any suspended passive losses are now allowed.
10,11,12 should be blank
Now for the 8949.
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.
The correct tax basis is:
What you paid originally, should be the same as what is on 1099-B as cost,
Then there is a column on the sales schedule that says cumulative adjustment to basis. If it’s positive add it to the original cost. If it’s negative subtract the amount.
Finally add the amount of ordinary income reported above, if any.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20AB. That number should be added to the ordinary income above for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.
