Question

K-1 (form 1065) from ETF and broker 1099-B entries are not matching

Forum|Forum|5 years ago
April 10, 2021
1 reply
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In 2020 year , I have purchased one of the pro shares ETF and sold in the same year.
I have sold the ETF in the loss and Broker is showing correct figure in the Box B (Short term not reported) in the 1099-B.
I have received the K-1 (form 1065) from Proshares ETF company. In the K-1 form they are showing in Part II column L "Current Year net Income" and showing as gain to me. I am not sure why they are showing gain to me?
In the TT , I have exported the Broker entries and entered this K-1 form as it is .
My questions:
- I think this K-1 form is not showing correct but when I checked with Proshares company then they are saying it's correct because they issue some profits in partnership and I have to adjust my form 8949 form, Is it correct ? if yes then how?
- Whether I have to enter both entries of same stocks in the TT?

TurboTax Premier Online

N

nexchap

Partnerships don't pay their own taxes. Instead, they put all the taxable items onto K-1s and send those out to their partners. Each partner that reports the information on the K-1 and pays the appropriate taxes.

For every item of income the partnership reports, you're basis in the partnership goes up. For every deduction/loss, it goes down. Because your broker doesn't see the K-1, they can't adjust what they report as your basis on the 1099-B. That's why they don't report the cost basis to the IRS.

In TT, when you enter the K-1, TT takes care of moving things to the right boxes. However, you have to refigure your cost basis and make sure its reported properly on your 1099-B. The k-1 may include information on how to do that. Or this thread, which has many comments getting into the complexities of handling PTPs, may help:

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/how-i-report-the-sale-of-mlp-shares-in-turbo-tax-i-sold-all-shares/00/776624

**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!

T

tk333Author

Thanks for the reply.

I am little confuse to adjust the numbers in 1099 form.

Below are the examples of numbers in 1099b:

total cost : $100

total proceeds: $70

wash sale $10

Example of k-1 form 1065 :

capital contributed during the year : $90

current year net income : $50

withdrawal and distribution: ($140)

box 1 ordinary business income 0

box 8 net short term capital gain $15

box 11 other income C $35

i have entered the 1099 and k-1 entered as it in the TT.

Please let me know by using the above example what should I adjust in the 1099 entries?

I am understanding that there is no adjustments required in K-1, please confirm it.

N

nexchap

@tk333 It may be a problem with your example, but if you bought the shares for $100 (total cost from your 1099-B), then the K-1 should show $100 for the 'capital contributed during year', not $90. If those numbers are truly different, you have to talk to the K-1 preparer and fix it. I'll assume in the below that $100 is the right number, and that your K-1 will be fixed.

The K-1 shows 2 items of income (box 8 and 11C) totaling $50. Those items are going to show up on your return. There's nothing that you need to do to adjust the K-1 entries, but since its always better to be careful you should make sure you see where those 2 items are winding up on your return. You can generally trace all these numbers through 'Forms' mode.

Because the K-1 raises your basis by $50, you'd adjust your 1099-B to have a total cost of $150 (not $100). Ignoring the wash sale, that gives a Cap Loss of $80 ($70-$150).

Note that, based on your example, the loss from 1/3rd of your shares is affected by the wash sale. So you have to adjust the wash amount of to $26.67, and add the $26.67 to whatever replacement shares were affected. When you eventually sell those shares neither your broker or the Partnership is going to have that adjustment, so you have to maintain your own records.

**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!