@mlpinvestor There's two things going on with a K-1: The partnership is passing all their taxable events on to the partnership, so you can report them to the IRS and pay tax.  You do this in TT by entering all the K-1 info and letting TT take care of reporting it in the right spot. You're getting the info you need to adjust basis, which only becomes relevant from a tax standpoint when it either reaches 0 or you sell. When you sell, the partnership is giving you the overall summary of all the basis adjustments (including anything reported on the current K-1) on the Sales Schedule.  Enter all the K-1 info as normal.  Then use the Sales Schedule to figure basis and cap gain. ... View more

@mlpinvestor 19A can be entered into TT, but it doesn't affect your taxes.  But its important information because it affects your basis.  11F and 9A are both handled by TT.  Enter them, and you'll see your taxes increase.  They also lower your basis.   Essentially, for any K-1, best practice is to enter everything into TT and then use Forms mode to double-check that TT was able to automatically process it (you can see this in forms mode, because some entries have an * telling you "Not provided for in program").  This will basically ensure that TT has the chance to use everything on the K-1 that should flow through your return.   The trickier part -- the part that TT doesn't make any attempt to handle -- is tracking your basis in the partnership.  That's why handling sales, or situations where basis drops to 0, trips up everyone who's hoping that TT will completely automate tax prep.  ... View more

@mlpinvestor I can't explain why the K-1 provider didn't issue 2 K-1s, other than a suspicion that they default to simple (everyone gets a single K-1) and then handle everything else on request.  As to amending 2021 or not, remember that the IRS gets a copy of the K-1 from the partnership.  Whether they'd ever notice a discrepancy is impossible to guess, but I'd suggest doing the calculation on what the "correct" tax return looks like so you know the amount that would be in question.  Then you can decide whether to amend everything, or just respond if an IRS inquiry ever shows up.  As always, this isn't legal or tax advice, or even anything that should be considered more than random musings....  ... View more

@mlpinvestor My condolences on your father's passing.  With regards to his K-1, I haven't worked through the mechanics or tax implications of K-1s at death, so don't want to mislead.  My intuition is to contact the MLP / K-1 preparer, and request two K-1s:  One for the period 1/1/21 until his death, which is when the partnership needs to be officially re-titled into his trust.  Then a 2nd one, for the period from then until the sale.  That 2nd one will have the correct basis, ord gain, and any other items of income or loss that need to be reported.   Note that its probably worth posting a separate question specifically on how the step-up should work, since I'd assume (but don't know) that the suspended losses are wiped out.   On the MLP that converted to a C-Corp, TT doesn't do anything with the line 19 entries, so entering it isn't a problem.  But you still have to report the conversion.  You do this by essentially thinking about the transaction in 2 parts: You sold the MLP for cash (reporting a complete disposition in TT) You immediately used that cash to buy stock in the new C-Corp (nothing to report, but setting your basis in the new stock) ... View more

You can enter footnote info on line 20, code AH.  However, TT doesn't do anything with that info.  On the forms (and maybe in the interview) there's an * stating "Manually enter item here and on appropriate tax form or schedule".   So the real question is whether any of those footnotes affect your tax return.  I'm not familiar enough with these entries to offer any opinion there.  If they do, you'd have to enter the numbers on the correct forms.  If they don't, you don't need to enter them at all. ... View more

@RedCab "whatever is retained is pro-rated to the investors as income and taxed" <-- This.   Imagine the partnership makes $5000, reporting it on the K-1.  You'd report the $5000, pay taxes on it, AND increase your basis from $25k to $30k.  Basically, any non-cash K-1 items that increase your taxes also increase your basis.  Any non-cash K-1 items that lower your taxes, lower your basis.  As for cash distributions, if you pay taxes on the distribution, it doesn't affect basis.  If you don't (e.g., some partnership distributions are treated as return of capital), they lower your basis.   In the end, the total loss you report to the IRS has to match the actual loss you experienced.  And similarly, any gain they tax should match an actual profit. ... View more

@RedCab You're missing the part about the $25k no longer being your starting point.  Partnerships refer to "basis" as what you get to use when computing your final gain.  Your "basis" started at $25k.  But it changes every year, based on what is reported on the K-1.   Think about it this way: First, for the moment, ignoring the 2007 distribution and anything else that may have happened on your past K-1s. You put $25k into the partnership.  You got $4k back.  That's a very real $21k loss.  But you're telling the IRS that you lost $32k.  So that can't be right. So the $11k losses currently on your return?  Those reduce your basis to $14k.  The losses you reported in 2007?  They reduce it further.    To verify the final amounts on your return, do this: Look at the entire partnership history from a cash standpoint.  What did you put in?  What did you get out?  That tells you what you should be paying tax on, over all filings from 2004 to 2021. Then look at past filings.  How much income/loss have you already reported and paid tax on? Your final return -- 2021 -- ought to plug whatever gap is left.   ... View more

@Stumas11 Mike's script is basically the same step-by-step guidance already described on this thread in multiple spots.  My point is a little different:  for simple tax issues, TT requires no thought or understanding of tax.  TT will ask for all the data required, do all the calculations, and produce a perfect return.  With partnerships (including MLPs), there are multiple ways to make mistakes that TT won't catch (e.g., did your suspended losses get released, did you calculate the correct basis, did you get the QBI deduction).  Even worse, just following the basic interview can create mistakes.  So the best approach is to both a) understand what is supposed to be showing up on the different forms, and why, and b) follow step-by-step guides on how to make that happen in TT.   There's lots of help on the forums for both a) and b), and many first-time MLP sellers have used that help to get through it.  But whether one invests the time to figure it out, or hires outside help, is just personal preference.  ... View more

@Stumas11  In most cases, reporting the sale is pretty straightforward.  But it does introduce a whole bunch of tax issues that TT “handles”, but doesn’t really explain or simplify.  And, unfortunately, TT makes it easy to enter things incorrectly, leading to tax errors.  So if this is your one and only interaction with MLPs, you'll have to decide if its worth the hassle to do-it-yourself.  But if you’re going to do MLPs / partnerships again, or are comfortable dealing with taxation, it’s very doable with the help available on the forum.   You’ll need Your original purchase info and the ‘Sales Schedule’ that will come with your 2022 K-1 The correct carryover losses.  You get to report these when you sell, but to do that you’ve got to get the right number into TT.  Ideally, in the first year you used TT for the K-1, you’d have entered the suspended losses from your wife’s return into TT when it asked about prior carryover losses.  If not, you can add them in during the 2022 interview, but that leaves open the possibility that something in a prior year’s return was incorrect. An ending capital account balance (section L of your last K-1) that’s above $0 (to make sure you’re still in the ‘simple’ category).  If your capital balance has dropped below $0, you may not have basis, or investment at risk, which definitely makes this complicated and expert help is probably called for. If you’ve been using Deluxe so far, and entering all your K-1 info there, then it will also work for the sale.   Hope that helps. ... View more