Question

For an MLP, is my cost basis for all my positions on my K-1 simply the information in Section L?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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I sold all my positions of an mlp this year so I need to correct the cost basis reported by my brokerage on 1099-B. I have the K-1 and I believe I can just use the information in section L to determine my cost basis. I believe I can just add the first 3 lines:

Cost Basis for all shares = Beginning Capital Account + Capital Contributed during the year + Current Year Increase

Is this correct?

TurboTax Self Employed Online

N

nexchap

Not quite. In addition to the lines you mentioned in your question, the "withdrawals and distributions" line also must be factored in because any distributions received prior to the sale will also lower your cost basis (that's the 'distribution' portion of that number).

And then, even if you factored that in, the total gain/loss recognized when you sell a MLP is split into 2 parts: a portion that is treated as capital gain/loss, and a portion that is treated as ordinary income. So the cost you enter on your 1099-B will not be anything you got from Section L.

The only way to figure it out is to work from the Sales Schedule that is included in your K-1. It will give you the total adjustments to apply to your original purchase, and also tell you how to split your gain between 'ordinary' and 'capital'.

**Say "Thanks" by clicking the thumb icon in a post**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user. Use any advice accordingly!

M

mameier

So Nexchap my question is if you have owned the shares of the MLP for say 2 years does the sales schedule take into account the distributions received in all years or just the year in which they were sold? Thanks