I have a long term gain reported by the brokerage AND the gain is shown on the K-1 received from the company - it looks like TT is counting it twice in my income -how do I correct this ?
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@SJB1216 Your k-1 entry feeds to the Capital gains spreadsheet. Did you enter only through the k-1 section or did you also import broker information? You can't do both.
Is this a grantor Trust so income is reportable directly on your return?
I entered the K-1 info AND imported from the brokerage. Should I delete the stock sale from the import ?
I was concerned because doesn't both the brokerage statement of the sale AND the K-1 get reported to IRS ?
most likely the brokerage does not have the correct cost/tax basis. that's because you receive a k-1 that affects the tax basis. The brokerage doesn't get a copy and therefore does not adjust for the k-1 effects.
the type is either B if short-term or E if long-term (tax/cost basis not reported to IRS)
with the k-1 you should have received a sales schedule that will allow you to compute the correct tax basis to use.
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here's a primer on reporting the k-1 and sale. So yes. the gain would in effect be double counted. Once through the k-1 and then the use of the 1099-B cost which may be lower than your actual tax/cost basis.
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MLP and PTP reporting k-1 and 8949 (box on k-1 checked)
Enter the k-1 info
Check the PTP box
If total disposition proceed as follows:
Check final K-1 (s/b marked on actual k-1)
Check sold or otherwise disposed of entire interest
On the k-1 disposition section for sales price use the ordinary income (sometimes you’ll see a column with the “751” or the words “Gain subject to recapture as ordinary income” or similar wording. This info comes from the supplemental sales schedule that should have been provided. It's also now on the k-1 box 20AB - no 20AB, no ordinary income column then the sales price is zero. The numbers I’m using represent the line numbers in forms mode (desktop only)
This amount flows to form 4797 line 10 and is taxed as ordinary income. This step is necessary so that any suspended passive losses are allowed.
Now for the 8949.
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.
The correct tax basis is:
What you paid originally, should be the same as what is on 1099-B as cost,
Then there is a column on the sales schedule that says cumulative adjustment to basis. If it’s positive add it to the original cost. If it’s negative subtract the amount.
Finally add the amount of ordinary income reported above, if any.
The result is your corrected cost basis for form 8949.
Some other things. Look at lines 20AB. That number should be added to the ordinary income above for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.
@SJB1216 Is this a PTP (Publicly Traded Partnership)? If so, TT has a problem in the K-1 section that causes the double-reporting. To work around it you'll make entries in the 'Enter Sale Information' section of the interview that will calculate to $0 gain, so that TT doesn't create a new 1099-B.
If you don't have any Ordinary Gain reported on your K-1, just enter 0 for Sale Price and Basis. If you do have Ord Gain, enter it on the Ord Gain line (you may have different values for Regular and AMT). Then enter the inverse of those numbers for 'Basis' (e.g., if Ord Gain is 100, enter -100). Sales price is still 0. If done correctly, the next screen (Investment Gain or Loss) will show all 0s. This eliminates the double reporting.
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