What forms are needed for sales of ETP LP?

[jamesrath1970]

I sold 15 shares of ETP LP last spring on Etrade. I had them for a little over a year.  Turbo tax wants to enter some info in 1099B worksheet.  I received a K1.  I also have a 2018 sales worksheet.  It talks about form 8949, 4797, and 6251.  In general, I sold the stock for less than what I paid for it.  Adjustment to basis is -46.  There is also an area, adjusted for bonus depreciation. -34 cumulative to basis and 41 gain to recapture as ordinary income.  I didn't make 41.  Any help would be appreciated. Thanks.

[ScruffyCurmudgeon]

There are two different tasks necessary to report the Energy Transfer LP transactions.

1. First in the interview go to the Investment Income --> Stocks, Mutual Funds, Bonds Other
   and add the information from the Form 1099-B reported for the sale of the shares of partnership interest.
   The gain or loss showing after entry should be identical to that reported on the Form 1099-B
   Gas pipeline and similar Publicly Traded Partnerships (PTP) do have adjustments to cost basis derived from deferred losses of prior years, so If there was a relevant adjustment to cost basis, eTrade should be reporting as Cost Basis this adjusted amount.  You should not be making further alterations to the reported cost basis.
   
   
2. The Sales Worksheet from the partnership should show the sale of the same number of units as are shown on the Form 1099-B.  However, since the partnership cannot know for certain what you paid to purchase the partnership units, where in fact eTrade should, the correct cost basis is that reported on the Form 1099-B.
   
   
3. Then you have to go to Business Investment and Estate/Trust Income ==> Schedule K-1
   and then enter everything from every field reported on the Schedule K-1.  Some, in fact many, may have no effects on your personal reported income, as PTP expenses tend in many cases not to be relevant to a personal Form 1040 filing and are not deductible personally.
   
   
4. Form 8949 will be automatically generated if the Schedule K-1 has entries for sales of assets, in line 8, line 9, possibly elsewhere.  Form 4797 will be automatically generated if the Schedule K-1 has reported sales of business assets (same issue as for Form 8949).  Form 6251 relates to Alternative Minimum Tax items reported on Line 17 and this may or may not effect you depending on your level of income, as AMT is a different tax rate system from normal income tax; again this will be automatically generated.
   
   
5. Most of the depreciation amounts with most reported on Line 20 are of no relevance to the personal Form 1040.  You can enter them but the entry is unlikely to be of use.
   
   
6. As a warning comment, investing in PTPs requires far more understanding of the accounting for gain and loss, and how these investment products benefit the personal taxpayer.  While TurboTax can accept the entries from the Schedule K-1 and properly process them, those that are relevant, the fact is that actually understanding them is more complex than understanding the gain or loss inherent in holding a share of common stock.
   
   As to this specific issue, many investors who choose to hold shares in PTPs do so for the purpose of deferring gain, and by accruing the annually disallowed losses that the PTP generates each year but cannot be reported against your income until the day that you liquidate all holdings in the PTP.  Then the disallowed losses from prior years plus any losses in the current year are transferred to your Form 1040 as negative amounts in Business Income.  It would be advisable to use Forms Mode and examine each Schedule K-1 and Schedule K-1 Additional Info sheet to observe the allowance of these previously disallowed business losses, and these will show in Section A of K-1 noting particilarl columns (b) and (c) in the year of total liquidation.

[jamesrath1970]

Thank you.

[ScruffyCurmudgeon]

you are welcome.  as said, in your other post, good choice to sell off the ET/ETP/ETE partnership in the IRA.