PTP K-1 form questions

[lilylee]

I made multiple Volatility(SVIX), Commodity(BOIL) ETF trades in my stock broker's account without knowing I was going to get K-1 form. I never dealt with K-1 before. But all my trades were very short-termed, some in the same day buying and selling, the others were held for a few days. All of them were bought/sold in 2023. One of K-1 form has all boxes either blank or 0 except Capital contributed and Withdraws boxes. I guess it wouldn't make any different regarding tax due if I add this K-1 form to Turbo Tax or not since the broker already included these ETF transitions in 1099B. Am I correct? The other K-1 form has a few boxes such as Interest Income, Deduction etc. filled with small numbers. Do I have to manually adjusted these ETFs' transactions that were automatically imported/filled in 1099B section based on the info. reported on K-1 form? In other words, do I need to manually adjust 1099B trades reported on K-1 form? I am using Turbo Tax Premier 2023. TIA

[nexchap]

The K-1 with all 0s won't affect your return, so the only advantage to entering it is as a record for your own files.  The K-1 with values should be entered, since it will impact your return and the IRS will expect to see those values reported.  Typically, any items that affect your basis will be summarized on a 'Sales Schedule', but if you didn't receive one:  any items on the K-1 that increase your taxes (like interest where you didn't receive the cash) will increase your basis.  Any items that lower your taxes also lower your basis.  You'd adjust your basis in the 1099-B  portion of the interview.

[lilylee]

My SVIX K-1 form had the following boxes filled: 

Part II:

Box 12 J: all 0's
Box L:
Capital contributed: $60392
Current year net income (loss): -987
Withdrawals: $59,405
Part III:
Box 5: Interest Income: $15
Box 11C: Other Income: -977 
Box 13AE: Other deductions: $25 
Box 20A: $15
Box 20B: $25 

I did receive 'Sales Schedule'. There was only one trade that Purchase Price/Initial Basis Amount and Cost Basis were different (-987). I guess that is the only trade that I need to adjust 1099B cost basis, correct? -987 was the only number on K-1 shown up on 'Sales Schedule'. How much cost basis should I adjust for that 1099B trade? Turbo Tax K-1 Step-by-Step interview seems to be complex. I don't understand many questions there.

@nexchap 

[nexchap · Accepted solution]

You'd reduce the basis on your 1099-B by that 987 (whatever you paid, less 987, is the correct basis).

The reason is that you're reporting income and deductions elsewhere on your return that lower your taxes (net):  $15 interest - $977 loss on straddles - $25 investment expense = -987

[lilylee]

The only trade that Purchase Price/Initial Basis Amount and Cost Basis were different on 'Sales Schedule' is as follows:

Purchase Price/Initial Basis Amount: 14,160

Cumulative Adjustments to Basis: -987

Cost Basis: 13,173

The same trade was reported on 1099B as follows:

Proceeds: 14,115

Cost or Other Basis: 14,160

What numbers should I put in the 'Partnership Basis' and 'Ordinary Gain' boxes on 'Enter Sale Information' screen using K-1 Step-by-Step interview? Thanks for the help!

[lilylee]

Do I need to check any of the following boxes?

Describe the Partnership:

Check any that apply to your investment in this partnership

1. I am required to pay supplemental business expenses on behalf of this partnership for which I am not reimbursed

2. All of my investment in this activity is at risk

3. I have passive activity credits to claim from this PTP 

I guess I need to check #2?

[lilylee]

@nexchap 

[nexchap]

Yes -- you check number 2.

[lilylee]

@nexchap 

I was able to dig out your answers to an old post that had the exact same issues as I had. I put the link here so it may help others.
https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/publicly-traded-partn...

My broker sent the 1099B with code A/D. I prefer not to modify the 1099B. I did what you recommended to enter 14,160 as 'Sale Price' and 13,170 as 'Partnership Basis' into the K-1 section of the interview. TT automatically created a new entry in the 1099B, code C with capital gain 987. I hope I did it correctly.

Thanks again!

[nexchap]

There are only a few scenarios where using the K-1 sales section actually helps, rather than just creating problems, but you found one!  Sounds like you did it correctly.