Schedule K-1 (Form 1065)

[yangq]

I received two K-1 forms after my fed return has been accepted. Then I tried to amend my fed return. One K-1 Form 1065 says "Do not use information in Part III" and I skipped the steps on Part III; the due amount did not change. Another form 1065 has 0s for all entries in Part III, and I entered them step by step; the due amount did not change either. Then TurboTax asked me why I need to amend, and I put something "I received Schedule K-1 with Form 1065", but TurboTax could not complete the amend. What should I do? Do I need to amend it if the due amount remains the same?

Thanks,

Qi

[MaryM428]

Yes, you do need to amend, even if your amount due does not change.  That is because the IRS will receive  copies of the K-1 and see that you did not enter them.

TurboTax wll not let you file an amend right now if there are unemployment benefits included on the return.  That is because TurboTax is still working with the IRS to ensure that amends do not cause any other problems.  

Sign up here to be notified when you can continue to amend your return.

[nexchap]

For the K-1 that said "Do not use Information in Part III", did it also include a supplemental schedule that is supposed to replace part III?  If this was a PTP that owned other PTPs, the K-1 needs to be split into multiple entries, so the K-1 includes a Supplemental Schedule that shows what each subsidiary K-1 is supposed to include.

[yangq]

Yes, it came with a supplemental information, and I will do it separately. Thanks a lot!

[yangq]

I have a follow up question and hope you can give me some advice. 

On screen "Choose Type of Activity" for Schedule K-1, the last checkbox says "This K-1 reports amounts in more than one boxes of 1, 2, and 3" then asks to use separate K-1 for each activity. My question is, does a zero in box 1, 2, or 3 indicate an amount and requires a separate K-1 entry? My K-1 lists three companies and all have a number in box 1, 2, and 3, but most of them are zeros. Just hope I could save some work for the entries of zeros.

Thanks in advance!

Qi

[nexchap]

@yangq You do not need to report the 0s, or create a K-1 for an entity with a 0 in box 2 or 3.

[yangq]

@nexchap Another issue came up when I tried to create a separate K-1: The supplemental form provides the name, FEIN, and Type of Activity for the other companies, but not complete information for Part I and II. I guess I have to use the same information of Part I and II from the K-1 I received to create the separate K-1 entries for the other companies in TurboTax, right?

Thanks again!

Qi

[nexchap]

@yangq You can duplicate the info, or leave it blank.  Most of that information is for your records (if you look at what actually transfers to your return you'll find its just the FEIN and partnership name).  So I typically enter everything for the 'main' K-1, and then just populate the name/FEIN for the subsidiaries.

[yangq]

@MaryM428 I efiled the Fed return, but have not mailed the state returns for CA and WI. Now should I use the amended Fed return to update the state returns or update the original Fed return then update the state returns? 

Thanks!

[yangq]

@nexchap More questions about K-1.

I bought 5000 of ET on 8-4 for 34,349.50 then sold them on 12-28 for 31,201.31, and also received dividends on 8-24 and 11-24 for a total of 2,322.88. (So I still has some left). I received Consolidated Forms 1099 from J.P. Morgan (I did it by Chase) and manually enter the data into TurboTax.

The K-1 schedule I received from ET shows different numbers:

1. Units Sold: 5000 (same); 2. Sale Date: 12-28 (same); 3. Sales proceeds: blank and asks me to enter it (31,201); 4. Average purchase price/Initial basis amount: 34,101 (different); 5. Cumulative adjustments to basis: -3,965 (what is it? I thought is should be the dividends, but it was 2,323); 6. Average cost basis: 30,126; 7. Gain subject to recapture as Ordinary income: 5,105 (what it it?) 8. AMT gain/Loss adjustment: 28; 9. 0%; 10. 278; 11. 2,425.

My questions are:

1. Is it normal that K-1 schedule shows different numbers such as 34,101 for Basis instead of 34,3495? Just want to make sure the numbers on the K-1 are correct.

2. To amend the Fed return, I entered the K-1 numbers into TurboTax, then I need to pay additional 1,033. Is that looks correct? I thought the K-1 schedule could reduce my tax amount as indicated by the cover letter from ET.

Thanks,

Qi

[nexchap]

@yangq On the difference in purchase price, the K-1 partnership gets its information on purchase price from your broker, so it should not be lower / different.  You should check your own records to verify what you paid, and then let the Partnership know if their records are wrong.  But it shouldn't affect your taxes (since you'll use whatever the correct purchase price is for your calculations).

As to the many other questions on the basics of MLP taxation, there are many similar questions and discussions in this thread that may help:  https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/how-i-report-the-sale...

[yangq]

@nexchap Thanks for your help! I will call ET to check the numbers.

Another issue: The ET K-1 comes with two other companies and one of them has numbers for both box 1 and 2. So I ended up with 4 K-1 entries. First I entered the sale data for all of them, and my income went up by almost 20,000. Then I removed the sale data from the other two companies and kept it only for ET. Is that correct?

[nexchap]

@yangq If you're entering the sales data as outlined in the thread I directed you to, then you're not impacting the 1099-B at all.  That's adjusted once to get the correct Cap Gain/Loss for the entire transaction.

All you're doing to capture the sale of the 4 K-1s is:

• marking them for complete disposition via a sale, which releases any suspended losses and
• entering the Ordinary Income associated with each of them

You have to do this for all three companies, since they each have Ord Income (the K-1 with only box 2 income will have 0 Ord Income -- you enter it all on the K-1 with the box 1 income).

Entering this could raise or lower your taxes, by a lot or a little, depending on how much Ord Income and suspended losses you have.