MLP Sale generates Ordinary Income?

[shydig]

I sold MLP holdings in 2022.  A portion of those sale proceeds are characterizied as "ordinary income".   There are some inconsistencies in K1 verbage from the MLPs.   One characterizes my gain as part capital gain and part "ordinary gain".  The other has a category for "gain subject to recapture as ordinary income".  I believe I have the information correctly entered into TurboTax.  The result on Form 4797 Part 2, is an "ordinary gain" of $10,143.  That carries directly to Form 1040 Schedule 1 (additional income), Line 4.  In line 5 I have an additional entry for partnership income totaling -$3143.  This results in a Form 1040, Line 8 total of $7000 in "other income".    

I didn't have any wages or other "earned income" in 2022.  Is this $7000 of "other income" considered "earned income"?  If it is earned income is my total earned income $10,143 or the net figure of $7000?

Lastly, if I didn't have any other real wages does this $7,000 (or $10,143) qualify me for a Roth contribution in 2022?

Thanks in advance for any clarity and insights you can provide.

Shydig

[shydig]

Well, I think I answered my own question.  I believe the answer lies in the definition of “ordinary income” not necessarily qualifying as “earned income”.  As I pushed through my taxes on TurboTax I tried to enter data for a Roth contribution.  The bottom line showed earned income as zero and calculated an allowed Roth contribution of zero.

[JulieS]

Yes, it sounds a though you answered your own question. 

Ordinary income is income that is taxed at your regular income tax rate, rather than the long term capital gains tax rate. 

In the context of the sale of business property, this is the part of the gain that is due to depreciation adjustments, in other words "gain subject to recapture as ordinary income". 

Earned income is wages and self-employment income subject to self-employment tax, and a few other less common types of income. So, no your income does not allow you to make a Roth contribution. 

[shydig]

Thanks