Question

K-1 Box 1 Business Income loss carryforward

Forum|Forum|3 years ago
March 12, 2023
1 reply
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I have owned a Master Limited Partnership for a few years. I've bought more units over the years, but I have never sold.

From the start of my ownership the K-1 has reported Business Losses in Box 1.

In 2022 the K-1 for this MLP for the first time has reported Business Income in Box 1.

How do I calculate the amount of accumulated Business Losses from previous year's K-1 Box 1 entries to determine the Box 1 Business Losses carryforward for 2022? The total accumulated Box 1 losses for this MLP are greater than the 2022 Box 1 Business Income, so I think I should be able to use historical Box 1 Business Losses to offset all of 2022 Box 1 Business Income. It's all the same MLP.

There is a section in the MLP K-1 questionnaire where it asks you if you have Passive Activity Losses carried over from last year. I checked Yes. The next page is labelled Report Carryovers - Regular Tax (see below). Do I enter my Passive Activity Losses in one of the boxes, or both of the boxes (see below)? And how do I use the historical K-1's to calculate the total Passive Activity Loss number to enter? Do I just add up all the losses from all the Box 1's? They're all negative up until 2022 which is positive.

N

nexchap

At its simplest, prior year box 1 losses will have all been suspended, so the total would be the carryover. But MLP's are frequently not simple, and entries elsewhere on the K-1s could have affected the total carryover.

How have you been preparing your taxes in prior years? If you were using a tax preparer, they should be able to tell you the suspended losses from last year. If you were using TT, it would have accumulated all the losses and made sure the calculation was accurate.

**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

MLP_BananaAuthor

I have been using TT to prepare my taxes since 2015, but I have switched between online and desktop versions, and this has caused problems with allowing TT to store my data and carry it over to future years. Also I have in some years changed my log in information, so the TT internally stored data is not reliable for me.

Each year I have enter the relevant "capital loss carryforward" information manually. I am wondering now (since it's the first time for this MLP to produce Box 1 Business Income where is the cumulative K-1 Box 1 "Business Loss carryforward" for this particular MLP stored? I don't see it on any previous tax filings. Do you have any idea where on an individual's tax forms are "accumulated suspended business losses" for a particular MLP?

If not, do you have any idea what is the formula to calculate it myself? I have all the K-1s from 2015 to present (lots of losses!!), and I've added to but never sold this particular MLP.

N

nexchap

On the desktop version, in Forms, go to "K-1 Partner (MLP Name)". Section A of that form will show 4 columns: a) this year's gain/loss, b) the carryover from prior years, c) the gain/loss being reported on this year's return, and d) the suspension for next year.

In this case, if you have a large suspended loss, this year's income should be completely offset so col c would be 0 and col d would show your suspension to next year being reduced.

**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!