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Annual how do I enter sale of MLP question

Forum|Forum|3 years ago
March 10, 2023
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My apologies if this has already been asked and answered, but I have not been able to find a response applicable to the 2022 TT version. Apparently, at least one of the older lengthy answers has been removed from this community because it's no longer applicable to 2022 TT.

Anyway, my question is how to correctly enter the sale of all or a portion of an interest in an MLP. By following TT's process, the sale data is entered both from the broker's 1099-B and from the MLP K-1 resulting in a mistaken double entry.

It would be great if one of the experts could provide a detailed, step-by-step procedure for correctly entering the MLP sale data to ensure that the data doesn't end up twice in the return.

Thanks in advance.

TurboTax Home & Biz Windows

Best answer by Mike9241

first, you need the supplemental schedule that accompanies the k-1 when units are sold.

Enter the k-1 info
Check the PTP box
Check sold a portion of interest in the partnership

Use QuickZoom to get to the disposition section (forms mode)

On the k-1 disposition section after entering the purchase and sales info use the ordinary income as the sales price. this comes from the supplemental schedule column 7 “Gain subject to recapture as ordinary income”.

(this amount is now also reported directly on the k-1 line 20AB)
Cost is zero
Ordinary income is the sales price.
This info flows to form 4797 line 10 and is taxed as ordinary income.

Now for the 8949.- capital asset sale worksheet
The broker’s form is probably coded as B or E – sales proceeds but not cost basis reported to the IRS. This is because the broker does not track the tax basis. It used what you paid originally which is not correct.

The correct tax basis is the sum of columns 6 and 7 from the supplemental schedule

Some other things. Look at lines 20Z1. That COLUMN 7 AMOUNT/20AB should be added to the ordinary income (or netted if 20Z! is negative) for reporting the 199A (qualified business income from the PTP). You don’t have to enter this but then you lose out on a tax deduction = 20% of this amount.

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BrittanyS

To enter a Sale of MLP in TurboTax online, you will follow these steps:

Click Wage and Income
Scroll down to S-corps, Partnerships, and Trusts, Click Show More
Click Start next to Schedule K-1
Click Start next to Partnership/LLC (Form 1065)
Click Add
Enter the Partnership Name and Address
Indicate if the partner is a retirement plan
Choose Limited Partner or General Partner
Choose a Domestic Partner or Foreign Partner
Enter the percentage of your share
Enter your liability share
Enter the Capital Account Information
Choose Disposed of a portion of my interest in the partnership during 2022
Choose Sold Partnership Interest
Enter Sale Information
Finish the remaining interview questions

@spoede1026

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spoede1026Author

@BrittanyS

I don't believe that your answer is correct.

First, there is no "S-corps, Partnerships, and Trusts" under "Wages & Income" in my 2022 version of TT. The place that K-1 info is entered is instead in the section entitled "Business Items: Business income and expenses, K-1s, farm income".

Second, and more importantly, you haven't addressed the issue of duplicate entries caused by downloading the 1099-B info from my broker and also entering the K-1 info. Doing so will show two sales in form 8949, not just one. This problem has existed in TT for years (as a search o the community will show), but previous years' workarounds are apparently no longer correct for the 2022 version of TT.

DaveF1006

To clarify, in your K-1, what boxes have recorded information in them?

@spoede1026

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Mike9241Answer