Question

MLP ordinary income in wrong place on Form 8949? And is statement required?

Forum|Forum|5 years ago
April 4, 2021
1 reply
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During 2020 I bought and sold ALL units in a MLP (thus all short term). The K-1 Sales Schedule says to report column 7 "Gain Subject to Recapture as Ordinary Income" ($83) as a negative adjustment to column G (adjustments) of Form 8949. Using the TT K-1 interview, $83 was added to my adjusted partnership cost basis in column E on Form 8949 and column G is blank. When using TurboTax step-by-step should I have entered the $83 somewhere else besides the "Ordinary Gain" box on the "Enter Sale Information" screen? The numbers end up right, just not in the right places.

Also, the K-1 schedule says to attach a separate statement to the return, which means I cannot e-file. Has anyone e-filed a MLP sale before (maybe @nexchap)?

N

nexchap

On your second question (ability to efile) I have been unable to do so. A sale of most MLPs requires an IRC Sec 751 statement, which I place on the "blank form" TT allows in Form mode. But that blank form doesn't get e-filed, so I file by mail.

On the location of the adjustment, I read the K-1 instructions about using Col G as their attempt to help you try to figure out how to fill out your forms. But its pretty generic advice, and doesn't need to be followed. The Ordinary Gain definitely needs to show up on Form 4797. Any released passive losses definitely need to show up on Sched E. And the correct Gap Gain/Loss needs to make it to form 8949. But you can adjust the cost basis by simply changing it (if it wasn't reported to the IRS), or by reporting it as incorrect and entering the correct one (in the case where the broker did report it.)

This thread discusses the entering of MLP sales in general, and focuses on not allowing the K-1 interview to mess with Cap Gain/Loss, or Form 8949/Sched D, at all: 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!

D

dlaccounts60Author

@nexchap, just to confirm, it's okay to make cost on the "Basis not reported" 1099-B = proceeds, since the correct income/gain info is on the forms you mentioned? And a big THANK YOU for your response. This all seems more confusing than it has to be, even without the partial sales problem mentioned in your link. And I haven't even gotten to the state return(s) yet.

Wish someone would do a Youtube video on this from the partner's perspective!

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nexchap

@dlaccounts60 Assuming you used the K-1 interview to enter the sale, and TT then created its own 1099-B (code C or F, for cost and proceeds not reported to the IRS) with the correct Cap Gain/Loss, then 'Yes' -- its fine to set the cost=proceeds on the broker supplied 1099-B. You only want that reported once.

**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!