1099-B and K-1 Form

[bobp1426]

Hi Nexchap;  Some more information that I think solves my issue and hopefully others.  In the TT interview, I followed everything you said, i.e. "Partnership ended in 2020", then next screen "Complete Disposition", then next screen "Sold Partnership Interest".  Then enter the dates sold then get to the "Enter Sales Information" screen.  Then entered the following based on my Sales Schedule which only shows dates, and: Purchase Amount ($2,400), Adjustments to Basis ($820) and Cost Basis ($,3220):

Sales Price = 0

Selling Expense = 0 

Partnership Basis =0

Ordinary Gain = 

1250 Gain = 

Did this based on what you said and the instructions from TT for line 5 and 7.  Since Line 8 Ordinary Gain is calculated by TT, didn't enter anything.  Interesting it says what you previously recommended (see below) - guess they've updated something. 

I then adjusted the 1099-B Cost Basis by adding the $820 for a net total of $3,220.  That shows a loss of $120, but in the end it balances out.   Everything else seems to appear correctly.  Form 6781 shows $328 short term and $492 long term, for this USO Partnership.  Schedule D now shows for the Broker 1099-B for this transaction that I adjusted, a loss of $120.  Best part, NO new Entries on Schedule D.  

With the Short and Long Term split with USO's K-1, my taxes actually went down by $60.  So I'll file an amended return with the new K-1 info.  I guess it is best to state that "adjustments made to 1099-B for this transaction due to K-1 information".  Should be OK - Did I do the correct inputs? 

Thanks Again for all your Help and I'm sure this thread will help others in a similar situation.  

Oh, here is what 2020 TT for Line 5 and Line 7 say (see NOTE): 

Line 5 - Sales price

Enter the selling price of the interest. For abandonment, enter zero. For liquidations, enter the value of the assets received. NOTE: If this is a disposition of a publicly traded partnership (PTP) or a master limited partnership (MLP) that was reported on a Form 1099-B, enter zero for both the sales price and the basis on lines 5 and 7 here and report the sale as normal on Schedule D, checking the appropriate "Reported on 1099-B" Box A or Box B. By reporting the sale of the PTP or MLP on Schedule D and entering zero as the sales price and basis on this K-1 Worksheet, the disposition will get processed correctly throughout the return.

Line 7 - Basis of partnership interest

Enter the partner's basis in the partnership here. Ideally, basis should be tracked each year on a worksheet in a permanent tax file. The program will assume that the basis for Alternative Minimum Tax purposes is the same as for regular tax purposes. You may change this entry, if this assumption is not correct. NOTE: If this is a disposition of a publicly traded partnership (PTP) or a master limited partnership (MLP) that was reported on a Form 1099-B, enter zero for both the sales price and the basis on lines 5 and 7 here and report the sale as normal on Schedule D, checking the appropriate "Reported on 1099-B" Box A or Box B. By reporting the sale of the PTP or MLP on Schedule D and entering zero as the sales price and basis on this K-1 Worksheet, the disposition will get processed correctly throughout the return.

Lines 8, 9, 10 and 11 - Gain (loss)

The program will calculate lines 8, 10, and 11. In the case of liquidations, enter any ordinary gain, as reported by the partnership, on line 9. Note: In the case of abandonments, the entire loss will be treated as ordinary loss and be shown on line 9.

[Mike9241]

when you dispose of a passive activity those passive losses become non passive.  each MLP stands to its own the passive loss from one can't be used to offset the passive income from another. so if you have two PTP's one with income and one with loss. the income will flow to schedule E and the loss will be suspended, 

also, should you have one PTP with income greater than its prior year passive losses the amount of current year income = to prior year passive losses will show up in the passive column while the excess will be non-passive.  just the strange rules that govern tax reporting for PTP's 

[bobp1426]

For Nexchap;  Forgot to mention that all the Sales Schedule is entered previously "Enter Capital Account Information".  Thanks Again

[LaJolla]

By the way I just tried creating a separate k-1 to account for prior years suspended carryover losses which I designated PYA.

In doing so, the current Year's Ordinary income (i.e. amount in Box 1 on k-1): 194 shows up on Schedule E column (k) "NON-PASSIVE" income and the cumulative prior   years suspended passive carry over losses show up on a separate line on Sch E column (i) -1389 "NON-PASSIVE" losses.

Again I am uncertain that this is correct since the income/losses is from a PTP (master limited partnership) which by definition falls under PASSIVE income and my past two years Schedule E when I had positive income listed in Box 1 on my K 1, showed the current year income listed in under column h which was off set by an equal amount of passive losses since I was able to utilize/release some of the prior suspended passive losses once my K-1 showed a net gain in 2018 and 2019 and my cumulative suspended net losses were appropriately adjusted to  account for this.

Am I doing something wrong, or did Turbotax correctly input my income and cumulative losses correctly on the Sch E under the "NON-PASSIVE"  column?

Again I did check Line 27 on Schedule E "are you reporting any losses not allowed in prior years..."

I am uncertain if I also need to checked Line 28  column (e) "for when a basis computation is required to be attached to the return if you report a loss, receive a distribution, dispose of stock, or receive a loan repayment from an S corporation" since I did adjust the cost basis from the sales schedule but I'm not sure that is applicable to Sch E. However, regardless if line 28e is checked or not it doesn't change how the income and cumulative losses are reported on Sch E
 

[LaJolla]

Thanks I just wanted certain that Turbotax was entering this currently since in the past I believe it automatically created two separate K-1 worksheets (one for the current years PTP and one for suspended carry over losses PTA) and this year when I imported my prior years turbotax information, the cumulative suspended passive carryover losses were simply on the same worksheet as the new K-1 information.

According to the IRS instructions for Sch E they state that Prior years unallowed losses must be reported separately from current K-1 and designated the former as "PYA" and this information should be entered in line 28 g (passive losses allowed k-1). But I cannot get Turbotax to do this and instead it reports it as nonpassive loss column i.

Also according to Schedule E part II text  "if you report a loss, distribution, or dispose of a stock you MUST check box 'e' on line 28 and attach the required basis computation. " However, I am uncertain what information I need to provide for this section and do I simply include this information as a supplemental statement?

[nexchap]

@LaJolla You're asking good questions and digging into the details, but all I can tell you is that I've never made any adjustments to Sched E in the years I've done my own MLPs. The way TT automatically handled it seemed to be correct.  That includes checking off all the right boxes.

• The line you're referring to about checking 28(e) refers to S corps (at least that's what it says on the TT version of the Sched E), so doesn't apply to a MLP.
• I've never had TT create two separate K-1 worksheets for a given MLP.  The worksheet always showed current year entries and carryover entries.
• Whenever suspended losses for an existing MLP (one that I haven't disposed of) are released they show up in 28(g) under a 'PYA' label.
• When the MLP is sold, the losses are released and show up as "Nonpassive", allowing them to offset other non-MLP income.

If you're concerned that there's a bug in the way TT handles K-1s and Sched E, I'd suggest posting the question separately.  You might get a more definitive answer from one of the TT employees.

[LaJolla]

Thanks I guess I interpreted the Schedule E part II text incorrectly and  had assume that if any of the situations that were referred to in the section applied than you must check box E; however, after re-reading the Sch E instructions you are correct and box 'e' line 28 only applied to S corporations 

"if you report a loss, distribution, dispose of a stock OR received a loan repayment from  an S corporation you MUST check box 'e' on line 28 and attach the required basis computation. "

I'll contact TT to see if they have any idea why the information is not going to the correct are on the Schedule E. If they come up with any usable information I'll report back

thanks

[Haydenbyers]

Thank you for this answer. I have 7 K-1s and I’m a lot of different transactions related to these publicly traded partnerships on my 1099-B.

Also almost all of these transaction are showing up under the “cost not reported to IRS section of 1099-B type B” section. Any tips on computing the correct tax basis which then should be substituted for what's on the broker's statement? I have a ton of entries. I knew I felt like I was being taxed twice by having it on the k-1s and 1099-B without adjusting the cost basis. Thank you

[nexchap]

@Haydenbyers This thread gets into the detail on how to handle this.  Its been running for several years, so there's lots of different examples and clarifications in the comments:

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/how-i-report-the-sale...

[Haydenbyers]

Awesome that thread was very helpful. Just a couple quick questions if you have the time I’ve very grateful.. so I completed the k-1 interviews I did not have Ordinary Gain so I put “0” there as I had already report gain in box11c contracts/straddles.. does that sound correct?

need help with this step: “Go the the 1099-B provided by your broker.  There will be a cost they provide, which isn't reported to the IRS.  This can be changed, so change it to whatever provides the correct cap gain/loss (you work out the cap gain/loss by using the K-1 worksheet).”

I have found the 1099-b entries in B section of not reported to IRS. Are you able to break down in detail what exactly to adjust here and what the calculation insists? I have over 3 pages on the sales schedules as I bought and sold a ton. Just trying to figure what numbers I adjust like box 1e or 1g. A link to the a walk through video of adjusting cost basis on 1099-b TT entries would be very heldful as well. Thank you very much for your time

[nexchap]

@Haydenbyers On your questions:

• Ordinary Gain is different than what's reported in 11C.  If the K-1 didn't report it on the Sales Schedule, you didn't have it and entering 0 is fine.
• TT doesn't have any automated way for you to recalculate your basis on the 3 pages of the sales schedule.  You're going to have to work through it yourself.  But the sales schedule should give you the formulas.  Basically, you start with what you paid, and it will tell you how much to add (the Adjustments to Basis) numbers.  That's the cost basis you'd want on your 1099-B.  As far as entering it, you can just type over the number provided by the broker (since its code B -- not reported to the IRS).  If the broker did report it (code A or D), then there's a spot in the interview where you can change it by checking a box to say that what the broker provided was wrong.
• I'm not aware of any walk-through videos on this, though I agree that it would be helpful.