schedule K1

[mootzie]

I'm at a total loss on how to report the sale of this limited partnership. The partnership redeemed all of its units in 2025. I know to report it as a sale. But I'm not sure I am entering everything correctly in TT and answering the interview questions correctly. The limited partnership is part of a trust. The original investment came from two different accounts within the trust so I have 1099b's in two different accounts. One is for the $15,000 investment and the other for the $50,000 investment. Do I break the sale into 2 different sales - one for the $15000 and one for the $50,000?

[DaveF1006]

Report these as two separate sales. You received two different 1099-B forms from separate accounts, and the IRS will look for those exact entries to match what the brokerages reported. Combining them could trigger a matching notice, since the IRS system won’t see a single $65,000 sale on your 1099-B records.

Entry 1: Report the sale associated with the $15,000 investment.

Entry 2: Report the sale associated with the $50,000 investment.

When a partnership is liquidated, you actually have two "halves" of the transaction to record in TurboTax. First, let's address the K-1.

1. The K-1 Entry (The "Inside" Basis)

Go to the K-1 (Form 1065) section. You will likely have received one K-1, or perhaps two if the partnership tracked the accounts separately.

1. Check the box that says "This is a final K-1" and "I sold or otherwise disposed of my entire interest."
2. TurboTax will ask for your Basis. This is often the part that trips people up. Your basis is not just what you paid; it’s adjusted by the income, losses, and distributions reported over the years on your K-1s.
3. The "Double Counting" Warning: TurboTax will ask if the sale was reported on a 1099-B. You must answer Yes. This tells the software to coordinate the K-1 data with the 1099-B data so you don't pay tax twice on the same gain.

2. The 1099-B Entry (The "Outside" Sale)

Go to Investment Income > Stocks, Mutual Funds, Bonds, Other.

1. Enter each 1099-B info exactly as it appears. 
2. Crucial Step: When it asks for the Cost Basis, use the adjusted basis calculated from your K-1 records. Often, the 1099-B from a brokerage will show a cost basis of $0 or the "original" purchase price. This is frequently incorrect for partnerships.

Since this is "part of a trust," ensure you are working within the TurboTax Business (for Form 1041) or the specific Trust section if you are a beneficiary receiving a K-1 from the Trust itself.

1. If the Trust is a Grantor Trust, the activity flows directly to your personal 1040. 
2. If the Trust is Irrevocable, the Trust itself pays the tax (or passes it to beneficiaries), and the entries must be made on the Trust's tax return

[mootzie]

I guess I should have said up front that we are using TT Deluxe. Mom is still filing her taxes using 1040 as her trust is still revocable. Dad had a separate trust and when he passed she inherited his trust. Everything was renamed to her trust, but the accounts he had still had their individual account numbers. When she bought the limited partnership units in 2020, $50,000 was taken from one account and $15,000 from a different account. When it was discovered in 2021, the units were "exchanged" and put in a new account together. The sale of the units this year, though, has the 1099B reporting out from the accounts the money was taken from originally. We can handle the 1099B portion but are still unclear on the "Inside" Basis. Is it correct to assume the Basis is $60629 since every year the only transactions were a balance of net income and distributions?

TT Deluxe does not have the screens you describe, especially the one that asks if the sale was reported on a 1099B. Is reporting it myself sufficient to prevent "Double Counting"? 

She received no other documents other than what I posted with my original post. So back to my original question - what do I put in the boxes for the sale information? And have we answered the questions on these screen shots correctly?

[DaveF1006]

Enter  the K-1 exactly how it's recorded on the Form you received. Then report the sales in the investment income section as I described. In the final filing, let us know if there are any errors.