How I report the sale of MLP shares in Turbo Tax. I sold all shares.

[nexchap]

@Stop-Tax-Co-Lobbying Sorry -- I was responding to two bonus depreciation questions (yours and the one just before it), but forgot to tag the other person.  In your case, with just 20AH4 (the code isn't consistent -- different partnerships report this using different codes), you'd just report a different passive loss in CA (assuming that's your state) then you do for the Fed.  How you make that adjustment is a mystery I can't help with.  But keep track of it, because at some point, when you sell, you'll have a final reconciliation with your basis adjustment (where you'll probably see a col 11 and 12 on your sales schedule).

[Stop-Tax-Co-Lobbying]

@nexchap I completely disposed of the fund in 2020 so this is the final K-1 but there was no Col 11 or 12 on the Sales Schedule?

[nexchap]

@Stop-Tax-Co-Lobbying Cols 11 and 12 seem to be new for K-1s, and clearly not everyone is providing them.  Either way, if your state is non-conforming, box 1 would be different (by the amount of the 'adjustment', and if the K-1 doesn't spell out how to apply it (whether to add or subtract) you may need to contact the preparer).  And your adjustment to basis would also be different by the same amount.

[Stop-Tax-Co-Lobbying]

Thanks @nexchap ! Hopefully I can get it sorted!

[-tax-prep-2018on]

Thanks @nexchap  Yes, no surprise here that CA is non-conforming.  Will try to muddle through on the Ca State forms. I understand the basic idea—i.e. repeat the exercise for Fed 1099B adjustments on CA forms, using numbers from K-1 columns...

BTW—for whatever reason, TT will not let me adjust numbers on 1099B forms (OVERRIDE command was greyed out), so I was forced to change on 8949 forms. That action has triggered messages from TT telling me that I shouldn't do that, if I'm filing electronically, which I do. BUT, I'm guessing it might be ok, because according to my 1099 these numbers were not reported to IRS... unless this means that TT won't let me complete and send my forms. I haven't finished return yet so I don't know. Any thoughts here? 

Thanks for all your guidance, you have been a life-saver. 

[nexchap]

@-tax-prep-2018on You shouldn't need to override anything.  If in forms mode, and the field you want to change isn't allowing it, it means that the field is being populated from somewhere else.  Typically, there should be a little magnifying glass popping up next to the field, and clicking that will take you to the source worksheet (where you'll be able to make the change).  Otherwise, right-click to bring up the context menu, and choose data source.  That will tell you what's feeding the field and you can navigate to the right spot.

[-tax-prep-2018on]

@nexchap Sorry, wasn't clear about that. At first, I tried to change the Cost Basis (for adjustment) on the 1099B worksheet, but it wouldn't let me, so I was forced to change numbers on the 8949 form, which flows into 1099B Worksheet, which flows into the Schedule D.

This action produced the following "error"  from TT in the Federal Review process— "Form 8949: Cost or Other Basis should not be overridden and changed for Electronic Filing..." I imported my broker's 1099B form electronically into TT, so form 8949 originally populated with unadjusted numbers. I overroad with adjusted numbers. TT wants me to cancel the override... 

I hope it lets me file electronically nonetheless... 

[nexchap]

@-tax-prep-2018on I'd suggest undoing the override and finding the right spot to make the change.  The reason TT doesn't want you to override is that a parent worksheet might be used on 5 other daughter forms.  Overriding the value on one of those daughter forms won't do anything about the other spots the parent is value is being used.

[Bruce52]

If you follow the input forms correctly you will double report gains on the sale of a partial or full interest.  The sale and cost data reported on the 1099 provided by your broker.  The only material problem for owners of less than a few thousand shares is the loss carryforward in the individual partnership.

They should have a box that asks if this sale is reported by a broker on a 1099.  In that case you should be able to click through the rest of the sale info and simply adjust the basis on Schedule D.

[Dave9999]

Thanks, I was afraid of this.....

[chiefs19]

Hello Nexchap,

I am a novice when filing MLP returns in TT and trying to following your steps below. I have tried to read through all the posts on this thread and the more I read, the more I get confused.

I purchased sales of the MLP back in 2011, reinvested distributions, and sold all the shares in 2021 through my brokerage. I am trying to complete the "Enter Sale Information" screen in TT using the K-1 2021 Sales Schedule from the MLP. Based on your steps below.

Step 1

What do I enter into the fields on the "Enter Sale Information" menu in TT?

Regular Gain or Loss 

Sale Price [ ] - What column on Sales Schedule?

Selling Expense [ ] - What column on Sales Schedule?

Partnership Basis [ ] - What column on Sales Schedule?

Ordinary Gain [ ] - What column on Sales Schedule?     

1250 Gain [ ] - What column on Sales Schedule?

AMT Gain or Loss

Partnership Basis [ ] - What column on Sales Schedule?

Ordinary Gain [ ] - What column on Sales Schedule?

1250 Gain [ ] - What column on Sales Schedule?

Step 2

What columns on the K-1 Sales Schedule should be sued to calculate the gain/loss?

I am sure I am not the only one who has questions regarding the sale of MLPs. Any help you can provide would be greatly appreciated. Thank you!

[vic201087]

sales will come from your broker's 1099b. the rest will be on your k-1. normally, they put a table that details your adjusted basis and ordinary gain. TT will then calculate your cap gains (make sure to delete the 1099b entry for this MLP to not double-count). 

[nexchap]

@chiefs19 Its a confusing subject, which is why this thread has grown so long over the years.  But take another look at the original answer:  I think it gets to all your questions.  For example, it says to enter '0' for sales proceeds, the Ordinary Gain from the K-1 (column 7 for regular, and column 7 + column 8 for AMT), and then the inverse of those numbers for the basis.  That's it for the K-1 part of the sales process:  you're basically just reporting the Ordinary Gain in that part, and this convoluted way of doing it is what's required.

For the second part of your question, calculating the capital gain/loss, the K-1 Sales Schedule has all the numbers except the "Sales Proceeds".  That comes from the broker.

[Sales Proceeds] - [Cost Basis] = Total Gain

[Total Gain] - [Ordinary Income] = Capital Gain

Modify your 1099-B to report this Capital Gain.

[chiefs19]

Hello Nexchap,

Just to make sure I understand you correctly, these are the columns on my Sales Schedule.

1. Units Sold

2. Sale Date

3. Sales Proceeds

4. Purchase Price / Initial Basis Amount

5. Cumulative Adjustments to Basis

6. Cost Basis

7. Gain Subject to Recapture as Ordinary Income

8. AMT Gain/Lost Adjustment

9. Percentage Long Term

10. Cumulative Adjustments to Basis

11. Gain Subject to recapture as Ordinary Income.

What field is the Sales Proceeds entered? I see Sale Price and Selling Expense in the TT form but not on the K-1 Sales Schedule. Do I leave Sale Price, Selling Expense, Partnership Basis (blank)? What about 1250 Gain?

Regular Gain or Loss 

Sale Price [ ] - Leave Blank

Selling Expense [ ] - Leave Blank

Partnership Basis [ ] - Leave Blank

Ordinary Gain [ ] - 0     

1250 Gain [ ] - Unsure?

AMT Gain or Loss

Partnership Basis [ ] - Leave Blank

Ordinary Gain [ ] - 0

1250 Gain [ ] - Unsure?

Sorry for all the questions! I do appreciate all your help!

[nexchap]

@chiefs19 Just to be sure you understand, you are going to be handling the sale in 2 places:  the K-1 interview, and the cap gain/1099-B interview.  For the K-1 part, you're only dealing with the Ordinary Gain/Income (col 7/8). 

You're unlikely to have any 1250 gain, so unless its discussed in your K-1 somewhere you'd leave that blank. 

"Sales price" is the same as column 3, but you set it to 0.  You don't enter the sales proceeds here at all.  They only show up in the 1099-B

Ordinary Gain is that same as column 7 (regular), or column 7 + column 8 (AMT)

Partnership Basis is set to the inverse of column 7 (so if that's 100, you'd enter -100).