Sign In
b1stauf
Returning Member
Member profile
Activity Feed for b1stauf
- Posted How is Net Operating Loss calculated on a K1 received from a MLP? on Get your taxes done using TurboTax. March 23, 2020 4:31 PM
- Posted Re: I need to enter a negative cost basis for some stock due to "return of capital". How do I enter this? on Investors & landlords. July 23, 2019 9:03 AM
- Posted Re: I need to enter a negative cost basis for some stock due to "return of capital". How do I enter this? on Investors & landlords. July 23, 2019 8:49 AM
March 23, 2020
4:31 PM
I need to provide information on NOL carryforward (if any) to my brokerage for my IRA so they can determine if they need to file a form 990-T for my account. Although I thought it was only negative UBTI from prior years that could offset positive UBTI for current year (and only for the same source/MLP), so I'm not really sure "NOL" is applicable, but that's what they asked for. This applies to K1 forms I get from MLPs (about a dozen of them). I still am not sure exactly how NOL is calculated. Apparently a "passive activity loss" is the sum of boxes 1 (operating income), 8, 9a, and 10 but is this NOL? I don't think so but I'm not sure. Does anyone know this for sure? Thanks!
... View more
Topics:
July 23, 2019
9:03 AM
Quick followup, IRS publication 550 says it all and fairly clearly: https://www.irs.gov/publications/p550 Under the 'Nondividend Distributions' section: Basis adjustment. A nondividend distribution reduces the basis of your stock. It is not taxed until your basis in the stock is fully recovered. This nontaxable portion also is called a return of capital; it is a return of your investment in the stock of the company. If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. See Holding Period in chapter 4.
... View more
July 23, 2019
8:49 AM
I believe that you report the cost basis as zero, not negative. As somebody else responded, once your ROC distributions exceeded your cost, you should have been reporting those distributions as capital gains all along. I'm not sure if they are considered short or long-term capital gains though, so definitely check into that. It's the same net result conceptually, if you reported a cost basis of negative $10, that's just like saying you made an extra $10 in capital gains when you sold the stock.
... View more
