K-1 Box 1 Business Income loss carryforward

[MLP_Banana]

I have owned a Master Limited Partnership for a few years.  I've bought more units over the years, but I have never sold.

From the start of my ownership the K-1 has reported Business Losses in Box 1.

In 2022 the K-1 for this MLP for the first time has reported Business Income in Box 1.

How do I calculate the amount of accumulated Business Losses from previous year's K-1 Box 1 entries to determine the Box 1 Business Losses carryforward for 2022?  The total accumulated Box 1 losses for this MLP are greater than the 2022 Box 1 Business Income, so I think I should be able to use historical Box 1 Business Losses to offset all of 2022 Box 1 Business Income.  It's all the same MLP.

There is a section in the MLP K-1 questionnaire where it asks you if you have Passive Activity Losses carried over from last year. I checked Yes.  The next page is labelled Report Carryovers - Regular Tax (see below).  Do I enter my Passive Activity Losses in one of the boxes, or both of the boxes (see below)?  And how do I use the historical K-1's to calculate the total Passive Activity Loss number to enter?  Do I just add up all the losses from all the Box 1's?  They're all negative up until 2022 which is positive.

[nexchap]

At its simplest, prior year box 1 losses will have all been suspended, so the total would be the carryover.  But MLP's are frequently not simple, and entries elsewhere on the K-1s could have affected the total carryover. 

How have you been preparing your taxes in prior years?  If you were using a tax preparer, they should be able to tell you the suspended losses from last year.  If you were using TT, it would have accumulated all the losses and made sure the calculation was accurate.

[MLP_Banana]

I have been using TT to prepare my taxes since 2015, but I have switched between online and desktop versions, and this has caused problems with allowing TT to store my data and carry it over to future years.  Also I have in some years changed my log in information, so the TT internally stored data is not reliable for me.

Each year I have enter the relevant "capital loss carryforward" information manually.  I am wondering now (since it's the first time for this MLP to produce Box 1 Business Income where is the cumulative K-1 Box 1 "Business Loss carryforward" for this particular MLP stored?  I don't see it on any previous tax filings.  Do you have any idea where on an individual's tax forms are "accumulated suspended business losses" for a particular MLP?

If not, do you have any idea what is the formula to calculate it myself?  I have all the K-1s from 2015 to present (lots of losses!!), and I've added to but never sold this particular MLP.

[nexchap]

On the desktop version, in Forms, go to "K-1 Partner (MLP Name)".  Section A of that form will show 4 columns:  a) this year's gain/loss, b) the carryover from prior years, c) the gain/loss being reported on this year's return, and d) the suspension for next year.

In this case, if you have a large suspended loss, this year's income should be completely offset so col c would be 0 and col d would show your suspension to next year being reduced.

[MLP_Banana]

Yes, thank you!  I do see the Box 1 Business Income suspended loss carryforward number.  Excellent!

So the next question is when I manually enter the number into TT, in which of these boxes (or both of them?) do I enter the accumulated loss number?  There is a section in the MLP K-1 questionnaire where it asks you if you have Passive Activity Losses carried over from last year. I checked Yes.  The next page (see attached graphic) is labelled Report Carryovers - Regular Tax (see below).  Do I enter my cumulative Passive Activity Losses in one of the boxes, or both of the boxes (see below)? 

[nexchap]

Box 1 suspensions would go in the box 1 carry-over box.

As a simple double-check, you can always enter large random numbers in any box and then check 'forms' to see where they wind up.  It only works if you have access to 'forms', but it's a fairly easy way to verify that everything is going where it makes sense.

[MLP_Banana]

Thanks for the answer.  I've entered the info in Box 1 carry over box, and it appears to produce the correct results.

Curious - do you have any idea what Box 2a is for on the graphic?  This page in TT is quite unclear as there is no explanation why TT is providing two options for boxes to enter accumulated losses (Box 1 and / Box 2a), but no explanation (on the page) as to which box to use.

Thanks very much for your help!

[nexchap]

The income generated by partnerships can be taxed in a variety of ways, on a variety of forms.  The income reported on Box 1 of a PTP runs through Sched E, so that's why it appears in that section of the form.  But a different partnership might have a carryover loss that's handled on form 1040 (which is where box 2a is going).

[MLP_Banana]

Understood, thanks!  My point I guess is that it would be helpful if TT said something like....

Put "Box 1 Business Income passive losses" in Box 1 Ordinary Income.  Put "carryover losses which run through the 1040" in Box 2a Ordinary Income.  You know, a little explanation would be great rather than the assumption that the customer knows what you've just explained to me.

Now that you've mentioned it, I'm curious about Box 2a Ordinary Income carryover losses.  Where would I find those on the K-1 or in the historical tax filings?  How should I know if I have any of these partnership carryover losses that run through the 1040?

[nexchap]

I've never seen that for an MLP.  But the TT interview is for every sort of partnership, so other types could have it.