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Solved

K1 issues for year 2022 Tax retrun.

Forum|Forum|1 year ago
October 3, 2024
2 replies
0 views

I am limited partner is some public traded partnerships/MLPs. When you fill K1, after all boxes interview K3 and box 1-20 question there are few questions, Describe the partnership.

Q1: I have passive activity losses carried over from last year

I checked yes as there are losses shown on K1 worksheet.

Q2: All of my investments in this activity is at risk?

I also checked yes, as partnership can go to Zero value.

Q3: I have at risk losses carrying over from 2021

Not sure about this one. I did talk to Turbo Tax CPA, and she said check Yes to that one. At that time by checking it did NOT change my taxes. I did Not pay attention to worksheet numbers. This one box did some issues, I think.

Q4: I personally paid Health insurance and long term (Health include dental)

I check that one yes as well as i did pay my own health insurance. Again turbo tax CPA told me to check yes but it did not change my taxes.

Issue is coming in K1 worksheet ( Section A, Passive Activity Adjustment to Income/loss Page 3 and Page 4 for AMT.

Let go back to 2021 return for same MLP.

For 2021 year gain/loss was ($ -10000, this number is Box 1 of K1 from Ordinary Business Income/loss) and suspended loss was from prior years ($-20000) = Loss suspended for current year = ($-30000). There numbers are made up for example only. For year 2021 and earlier I NEVER checked YES to box 3 and box 4 question mentioned in the top.

Now for 2022 I did check yes to Box 3 and Box 4 (describe the partnership) on advice of turbotax CPA.

In 2022 MLP produced ($-5000, Box 1 of K1) and I have carry over of ($-30000)

now software did sort of something new.

This is in worksheet of K1, page 3

It is showing ($-35000) as gain/loss limitation column and next column is suspended loss carry over as ($-30000) = Loss suspened for current year = ($-65000)

I think it was due to checking YES to earlier question Q3: I have at risk losses carrying over from 2021

At that time it did NOT change my tax amount so did not pay much attention to worksheets.

Issue is

I sold this partnership in 2023. My understanding is source of this Ordinary income/loss for MLP is depreciation so at time of sale it is sort of reversed to show value which is reported on Final K1 as Gain subject to recapature as ordinary income. My understand is usually these number sort of close to each other.

Due to this error this extra loss (almost 30k!) and it is reducing my income on Sch 1 of 1040 on my 2023 return.

What are my options?

Best answer by Rick19744

Here are a few high level comments:

Since we can't see your return, and based on the issue you are having, I believe you need to contact TT support as they will have the ability to see your actual tax return.
The issue appears to be that TT is some how doubling up the $30,000 loss carryover.
- This could just be a glitch or something not checked appropriately
- Only someone at TT would be able to determine this
Have you indicated in TT that this is a PTP?
You also don't mention if you used TT in 2021; not real clear as to whether the TT software was used or you are inputting the information from scratch. I wouldn't expect to see some of the questions being asked if you used TT in 2021.
Unchecking the two boxes you noted in a reply was the correct thing to do.
This is just one of those situations that a forum such as this is just not able to diagnose easily.

sam992116Author

I described issue earlier. I thought about amending my 2022 return

I am trying to amend my 2022 return. I saved a new amended return and went to Other Tax situation and amend a return and wage and income and K1 and went to Interview section Describe the partnership.

I Unchecked to questions

Q: I have at risk losses carrying over from 2021

Q: I personally paid Health insurance and long term (Health include dental)

then I went through interview and I checked Form mode but it did NOT correct calculation I mentioned earlier.

I went to interview mode again. Turbo Tax did remove/uncheck answer to Health insurance but at risk loss carry over from 2021 still is Checked. So worksheet are still showing same numbers. I have uncheck this question like 5 or 6 times but question is still checked and Calculation are same which are showing twice as much carry over loss. What are my options.

Sorry lot of details and I hope you can understand what I am trying to say. Thank for any help or suggestion in advance. I will really appreciate any feedback.

sam992116Author

Any one?

sam992116Author

thanks

Rick19744Answer

Employee

Here are a few high level comments:

Since we can't see your return, and based on the issue you are having, I believe you need to contact TT support as they will have the ability to see your actual tax return.
The issue appears to be that TT is some how doubling up the $30,000 loss carryover.
- This could just be a glitch or something not checked appropriately
- Only someone at TT would be able to determine this
Have you indicated in TT that this is a PTP?
You also don't mention if you used TT in 2021; not real clear as to whether the TT software was used or you are inputting the information from scratch. I wouldn't expect to see some of the questions being asked if you used TT in 2021.
Unchecking the two boxes you noted in a reply was the correct thing to do.
This is just one of those situations that a forum such as this is just not able to diagnose easily.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

sam992116Author

@Rick19744

Thanks I have Called TT several Times. First you talk to someone known as Product specialist and they have no idea about taxes and Product Specialist I think only are there to tell what are different products or sell you higher price items.

Once you go through product specialist and go to Tax specialist. For some reason they all know about K1 but when I describe situation they are clueless what to do. Only good answer I got is, this is software issue so they don't know what to do. I am not able to find right person who knows K1s like you guys do. Even though you are NOT able to see my return but you still understand issues very clearly. Most TT tax specialist are clueless even Tax return is in front of them (Screen Sharing).

Yes I used TT in 2021. For 2022 return I called TT for different issue of K1 and I asked about questions At risk loss and Health care. TT CPA told me go ahead and check them. It did not change Tax and I did not look worksheet. Again you need to look in very detail to find out what is happening.

My understanding is best route to enter or delete information in TT is via interview mode but software is NOT letting me uncheck a box. I unchecked and it goes back checked by software and At risk worksheets are still there.

Q: Is At Risk Wks P and At risk Wks Alt is same form 6198?

Should I delete these to see what happens. Again this is additional saved return so I still have original return.

Rick19744

Employee

Follow-up responses:

I believe the issue is your ability in not being able to have TT "uncheck" the at-risk box. Plus I'm not clear on whether you entered an amount in the area when first entering the information.
If you have an amount in this box, enter "0". If it does not let you enter zero, then just put in $1.
As stated previously, the system is doubling up the $30,000 carryover.
See if bullet #2 resolves the issue.
If it does not resolve the issue, then we will see if we can expedite the issue within our limited means of communication with TT.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.