K-1 Sales Schedule Column 7 Adjustment

[paullam99]

I made a partial sales of an MLP. I reported the sales proceed during the K-1 Q&A session in TT. In Column 7 of the Sales Schedule section of the K-1, the instruction said to enter the number in Column 7 as a negative number in Column (g) of Form 8949. But in the Q&A session, I cannot find a place to enter Column 7. My questions:

1. Should I just go to "View Forms" in TT and enter the number in Column 7 as a negative number in Column (g) of Form 8949 directly? 

2. If Answer to Question 1 above is affirmative, What Code should I enter in Column (f) of Form 8949?

Thanks.

[Mike9241 · Accepted solution]

column 7 of the supplemental sales schedule needs to be entered in the sales section of the k-1. it's ordinary income that should flow to form 4797 line10

this ordinary income increases your tax basis in the partnership. your options are to add it to the tax basis reported n column 6 (column e on the 8949) or enter as a negative number in column g on form 8949. use code B for column f

the broker's 1099-B does not report the correct tax basis. 

[paullam99]

Hi Mike9241, your reply is extremely concise and helpful. Thank you very much.

[paullam99]

Hi Mike9241 or others who maybe able to help:

Since the TT Q&A session does not lead me to enter the amount in column 7 of the Sales Schedule of the K-1, I tried to go the Form 8949 by using the "View - Form" function. However, when I opened Form 8949 and highlighted Column g and tried to enter the information from column 7 of the Sales Schedule, TT would not accept any number that I type in. So my question is: How do I enter the information of column 7 of the Sales Schedule into Form 8949? Would you please show a step by step sequence to enter this information? Thanks.

[paullam99]

I also checked my list of forms in TT. There is no "Capital Assets Sales Worksheet" for the partial sales of the MLP units, which I entered as part of the Q&A process of the K-1. So my question is: Which work sheet do I need to go to in order to enter the Column 7 information from the Sales Schedule of the K-1? Thanks.

[Mike9241]

step mode

wage and income tab

I'll choose what to work on

scroll down to business items

click on update k-1

click on update partnership/llc

highlight partnership then click on edit

click on continue until you get to the window that says "describe the partnership"

check "this is a publicly traded partnership" and

check "disposed of a portion pf my interest in partnership in 2023"

click continue

on the "enter sales dates" window

enter the appropriate dates

click continue

on the "enter sale information" window

enter the ordinary income on the line that says "sales price"

enter the same amount on the line that says "ordinary gain"

if the ordinary gain is less than the passive losses, if any, passive losses will be allowed to the extent of the ordinary income. any remaining suspended losses would not be currently deductible until there either there is complete or partial disposition. if there are no passive losses igmore this.

[paullam99]

Hi Mike9421,

Thanks again for your prompt reply.

The amount of "ordinary income" shown on column 7 of the Sales Schedule section of the K-1 is an amount that is different than the amount shown on my Broker's 1099-B as "Total Proceed" for the partial sales of these MLP units. If I enter the amount shown in "ordinary income" as the sales price, it will not reconcile with the "Total Proceed" as reported on the 1099-B, which is reported to the IRS.

Would appreciate it if you can shed more light on this subject. Thanks.

[Mike9241]

with a partnership, your tax basis starts with what you invested. that goes up by any income and down by losses expenses and distributions. The broker does not track tax basis because it does not get the k-1. What the broker shows on the 1099-B is your original cost for the shares sold. Do not use it. THIS IS NOT YOUR TAX BASIS.

ASSUMING YOU BOUGHT THEM AS OPPOSED TO BEING GIFTED OR INHERITING THEM, YOUR TAX BASIS FOR THOSE SOLD WOULD BE ON THE SUPPLEMENTALSALES SCHEDULE. COLUMN 6 WHICH REPORTS TAX BASIS (before ordinary income recapture) + COLUMN 7 THE ORDINARY INCOME

MORE INFo some states do not allow for bonus depreciation. if done correctly federal bonus deprecation would have been an add-back on your state return (but not federal). In this case the PTP will report the proper adjustments to basis for state reporting purposes and ordinary income in columns 10 & 11 (ie if you added back bonus depreciation for state purposes substitute column 10 for column 5 and recompute your tax basis in column 6. then ordinary income recapture is in column 11 which would get added to the revised column 6 tax basis. NOTE that this is only for state reporting purposes when there's bonus depreciation for federal but you adjusted the profit and loss reported for state.

read hat's om the sales worksheet describing the various columns.