Received a K-1 and 1099-B for selling all shares in a PTP ETF. Please help me check my work

[pinguino]

In 2024, I sold all my shares in a commodity ETF (BOIL) that was organized as a PTP so I got a K-1 package and a 1099-B from my broker.  I did a lot of research here to figure out how to correctly enter this sale into Turbotax Online, especially the cost basis correction on the 1099-B and avoid the double counting of the capital gains. Posts by @nexchap and @Mike9241 were helpful, but I would still like some help to check my work.

I filed an extension to file my 2024 taxes so I'm under pressure to get this done.

Here are some screenshots from parts of my K-1:
 

 

 
    
 For the TurboTax online K-1 interview,
Describe the partnership: This is a publicly traded partnership, Partnership ended in 2024.
Describe partnership disposal: Complete disposition
Tell us about your sale: Sold partnership interest
Enter Sales Dates: Purchase Date VARIOUS, Sales Date 3/18/2024. I had purchased shares in this ETF over multiple lots at different times in 2022 and 2023.

Entered the box values shown in my K-1 part III and K-3

For this second "Describe the partnership" screen, do I have the correct boxes checked below? I never made any money on this PTP and have had losses for a sale of some shares in 2022 and also having large partnership losses in 2023.  Do I need to keep track of the partnership losses in this ETF? I never made any profit either from the sale of shares in the ETF or from the partnership's activities. I assume that these losses can be carried over from year to year, but I heard that I can't really uses these losses to offset gains for my real estate income or capital gains from selling off stocks. 

 
 
I left the sale information blank since I had no ordinary gains or 1250 gains. Per advice found elsewhere on this forum, I'll report the capital loss from the sale of the shares on the 1099-B from the broker with an modified cost basis.

Next, I'll describe how I adjusted the cost basis on the 1099-B from the broker (Fidelity). This is where it gets complicated. I had purchased shares in the ETF over multiple lots. For the sale, some were considered as short-term transactions and the rest were long-term. Also Fidelity thinks it knows the correct cost basis for this PTP and reported the basis to the IRS (box A, D checked)
1. figure out the correct cost basis for all the short term and long term sales.
From the K-1 Sales schedule, the adjusted cost basis in box 6 is 7389.
LT adjusted cost basis = 7389 * 0.46 = 3398.94
ST adjusted cost basis = 7389 * 0.54 = 3390.06
 

2. 1099-B cost basis adjustment

Based on the K-1 sales schedule and my calculations, the ST cost basis = 3398.94.

But my 1099-B short term transactions show two lots and I decided to allocate a portion of the ST cost basis according to the lot size. (See screenshots below)

short term lot 1, 100.209 shares, adjusted cost basis = 3398.94 x (100.209 / (100.209 + 99.76)) = 1999.51

short term lot 2, 99.76 shares, adjust cost basis = 3398.94 x (99.76 / (100.209 + 99.76)) =  1990.55

By doing this, the total adjusted cost basis for all the short term lots equals the 3398.94 figure that I calculated from the K-1 schedule.

In a same manner, I allocated the LT cost basis of 3390.06 across all the share lots for the long term transactions.

For the first short term lot1, I entered the adjusted cost basis in Turbotax online by checking the box "the cost basis is incorrect or missing". Am I correct to click on this box, despite Fidelity reporting the broker's cost basis to the IRS?

Thank you for making it to the end! 

[Mike9241]

your asking from live for which you paid extra. aren't they able to answer.

anyway the easiest way to check to see if thinks are correct on the 8949

short term proceeds 2832 cost allocated 3990 adjusted loss -1158

long-term proceeds 2464 cost allocated 3399 adjusted loss -935

in the sales section of the k-1 proceeds, basis, ordinary gain, 1250 gain for both regular tax and AMT are zero

by the way i think your broker report them as the wrong types A and D (tax basis reported to IRS). Generally, the broker doesn't know the correct tax basis a taxpayer has in a PTP/MLP because they don't get the k-1 to adjust the cost for the partnership activity. You can see their misreporting. they were supposed to use type B and E which means they would not report tax basis to the IRS only the proceeds. 

in type B and E the 1099-B would still show what you paid but that would not be reported to the IRS 

[pinguino]

Thanks for the feedback. I'll check the figures on form 8949.

As for Turbotax live, I've gotten bad advice regarding handling of the K-1's and 1099-B's last year. One agent told me to enter my sales proceeds from the 1099B and cost basis from the sales schedule into the K-1 interview about the sale. Also this person thought the "ordinary gain" was the simply proceeds minus cost basis.

So I don't have much confidence in the Live experts to tell me the correct thing to do here.

[user17604968025]

I am not a tax expert, but I have been filing my own returns for some years.  I think that the K-1 is the authority.  The info the brokers have on their 1099's may or may not be correct.  I have a somewhat similar situation when brokers show 1099-MISC for royalties that have K-1's.  The way I deal with this is to try to avoid doing something that might trigger a IRS computer red flagging something on my return.  So, I report the brokers 1099-MISC figure in the section where I enter the broker's data.  Because I think that the computer wants to see that figure there.  Then, in the section where I enter the K-1, that is where I will correct for the broker's figure if necessary, and I will use the note box for that field to explicitly explain exactly what I am doing and why (as briefly as possible).  So this way I do not change any of the broker's figures in the TT section where I enter the broker's data.  But in the TT K-1 section I adjust the K-1 figures to correct the broker's figures if necessary.  Sorry for your loss.  The IRS has never given me a problem over this method so far!  Good luck!

[Mike9241]

@pinguino 

you are not the first to complain about Live help giving bad answers. 

[statusquo]

Hi @pinguino 

I'm also under pressure to submit my amended tax today, but wasn't sure if my adjustment is correct.

It appears your K-1 is almost the same as mine except I didn't have any long term holding, just short terms.

Were you able to do the adjustment your cost basis from the imported 1099B?

I explained how I did it in my last post here 

https://ttlc.intuit.com/community/taxes/discussion/re-help-filing-final-k-1-form-due-to-trading-uvxy...

But wasn't sure if that's correct. Is that how you also did it?

Hi @Mike9241, really appreciate your help in this community board!

Sorry to ping you again. Could you also help check if the cost basis adjustment I did (in the post above) looks correct?

[Mike9241]

@pinguino you provided no numbers. so does the gains/losses computed on that sales schedule match what was reported om the 8949

[pinguino]

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@Mike9241 wrote:

anyway the easiest way to check to see if thinks are correct on the 8949

short term proceeds 2832 cost allocated 3990 adjusted loss -1158

long-term proceeds 2464 cost allocated 3399 adjusted loss -935

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I checked my form 8949 in Turbotax and added up the adjusted loss for the short term lots and got -1159. For long term, I got -936. The $1 difference is likely due to Turbotax rounding earlier in the calculation.

[statusquo]

@pinguino 

I also had $1 difference and I think it's due to rounding in the calculation.

But total on column h equals to the expected reported gain based on my K-1 sale schedule.

Have you e-filed your tax yet? 

It's a huge pain to file tax due to trading PTP ETF. Most people would not realize this until they receive schedule K-1 (often late, at least for me).

[pinguino]

I just e-filed at 11:58pm local time. I'm now worried about getting charged late penalties because it's not clear whether the time deadline is based on what time the IRS officially receives the return. 

https://waysandmeans.house.gov/wp-content/uploads/2025/02/HR-1152-One-Pager.pdf 

[pinguino]

Hi @statusquo 

I was able to directly enter the corrected cost basis value (distributed for each lot in the sale) instead of having to calculate the adjustment  in your post. Once I entered the correct cost basis value, Turbotax calculated the adjustment value.

https://ttlc.intuit.com/community/taxes/discussion/re-help-filing-final-k-1-form-due-to-trading-uvxy... 

[Mike9241]

you may receive a notice from the IRS. You broker incorrectly use type A or D (should have used B and E) which means it reported the tax basis to the IRS. the IRS is going to match what you reported to what the broker reported. Since there is this mismatch, it may want an explanation.

[statusquo]

Silly question but what would be the "best" or appropriate way to explain this to the IRS if we got a letter from them? As you said before, my broker incorrectly reported my tax basis to the IRS (box A) because it didn't know and they also didn't  provide a corrected 1099B. Do I just explain to them by stating that the schedule K-1 has the correct reporting and should be used instead of the incorrect reporting from the broker (for UVXY ETF only)?

Also my apologies, this isn't my thread but our K-1 is just so similar.

My thread is at https://ttlc.intuit.com/community/taxes/discussion/re-help-filing-final-k-1-form-due-to-trading-uvxy... which I really appreciate you for helping.

[Mike9241]

you probably did what may others do when they sell a PTP and that is to NOT attach the section 751 statement (would require mailing your return), If the IRS inquires you can explain the situation. It was a sale of a PTP. The broker reported the incorrect tax basis using type A or D when for a PTP the correct type is B or D. - tax basis not reported to IRS because the broker doesn't know it. The tax basis comes from the sales schedule provided by the partnership. A copy of which is enclosed. I made a mistake by adjusting the reported tax basis rather than using the adjustment column (code b) but the reported gain/loss is correct.  

perhaps also complain to the broker about their misreporting. maybe even move your account. 

[statusquo]

Thank you for the detailed explanation. One other question.

I received my schedule K-1 late (after I filed my original return back in April). I didn't know UVXY was structured as a partnership and would need special handling when doing my tax so I was assuming everything was correct.

>> I made a mistake by adjusting the reported tax basis rather than using the adjustment column (code b)

I guess I made a mistake by not knowing this but should I update this statement to include the fact that the schedule K-1 was late and I wouldn't know the amount to adjust it to until I actually receive it?