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How to merge passive losses in MLP merger?

Forum|Forum|6 years ago
June 4, 2019
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In 2018 I owned two oil and gas Master Limited Partnerships (ETE and ETP). Both are publicly traded. During 2018 they merged into a new entity ET. I have checked the "Final K-1" in for ETE and ETP. Do I also check the "Partnership discontinued during 2018" box or one of the other choices? And more importantly, how to I get my deferred passive losses moved from ETE and ETP over to ET?

TurboTax Deluxe Windows

Best answer by nexchap

On entering ETP and ETE you'd select "This partnership ended..." and then "Disposition was not via a sale". This will allow you to enter the K-1 as you normally would, but will leave the passive losses suspended.

As for merging, the simplest way is to wait until next year. When you're completing the K-1 for ET (or for ETP since its still broken out by ET) you'll get to the question about suspended losses from last year. Edit this entry to be the sum of whatever TT automatically brought over, and what you need to merge.

Note that next year TT will import ETP and ETE again, but you can delete those entries once you've grabbed the suspended losses from them.

One other option, that works only for ETP: ETP continues to exist, and is broken out by ET, so you'll still have an ETP K-1 in TT. If the FEIN hasn't changed, you could simply add the values supplied by ETP (on your final K-1) and by ET (for the ETP sub-K-1) together, and keep processing ETP as normal.

N

nexchapAnswer

On entering ETP and ETE you'd select "This partnership ended..." and then "Disposition was not via a sale". This will allow you to enter the K-1 as you normally would, but will leave the passive losses suspended.

As for merging, the simplest way is to wait until next year. When you're completing the K-1 for ET (or for ETP since its still broken out by ET) you'll get to the question about suspended losses from last year. Edit this entry to be the sum of whatever TT automatically brought over, and what you need to merge.

Note that next year TT will import ETP and ETE again, but you can delete those entries once you've grabbed the suspended losses from them.

One other option, that works only for ETP: ETP continues to exist, and is broken out by ET, so you'll still have an ETP K-1 in TT. If the FEIN hasn't changed, you could simply add the values supplied by ETP (on your final K-1) and by ET (for the ETP sub-K-1) together, and keep processing ETP as normal.

**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

taxpayers1

I'm hoping to get more clarification on how to carry over the suspended losses for each of the PTPs that exist under the "umbrella" of the Master Limited Partnership, since each PTP, as well as each activity within that PTP (e.g. from box 1 - Ordinary Business Income or Loss, box 2 - Net Rental Real Estate Income or Loss, or box 3 - Other Net Rental Income or Loss) results in a separate K-1, and each of those K-1s may have suspended losses.

I've had ETP for several years, and from year to year the PTPs change, and the activities for each PTP change, so when TT imports the K-1s from my previous year's return, it often will not match what needs to be entered for the current year. For instance, in 2016 my ETP MLP resulted in seven K-1s being created in TT: three separate K-1s for ETP as it had activity in box 1, 2, and 3; one K-1 for Sunoco Logistics (SXL); two K-1s for Sunoco LP (SUN); and one K-1 for PennTex Midstream Partners (PTXP). However, in 2017, my ETP MLP no longer had Sunoco (SUN) as a PTP, nor did it have any activity in box 2 for ETP, so three of the K-1s from my 2016 return were not not part of my 2017 return, and two of those K-1s had suspended losses to carry forward. And now from my 2017 return, TT has imported the K-1 for SXL and PTXP which are no longer part of the ETP MLP, and both have suspended losses to carry forward.

How do I carry forward the suspended losses from the PTPs that no longer exist within the ETP MLP? And if passive losses can only be offset by passive gains within the same PTP, then what happens to those losses when the PTP is no longer a part of the larger entity? Can I adjust the suspended loss in the final ETP K-1 for 2018 to reflect the losses from the SXL and PTXP PTPs carried forward from 2017 even though they are from completely separate PTPs? Any help would be appreciated!

R

ras208

in 2022 one of my MLP merged into another how do I treat this so my passive losses flow into the new MLP

Ralp [phone number removed]

[email address removed]

AliciaP1

For 2022 you will report your "old" MLP as normal with the passive activity losses attached to it and the Schedule K-1 needs to be marked This partnership ended in 2022 and Disposition was not via a sale. Then enter the Schedule K-1 for the "new" MLP partnership but do not report any carryover losses for it in 2022. When you prepare your 2023 tax return (next tax season) you will delete the "old" MLP Schedule K-1 and only enter the "new" one but report the carryover losses that remained from 2022 here.

@ras208

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