MLP PTP sales schedule adjustments to basis and gain subject to recapture.

[LSTAX]

I am trying to enter a sale of MLP PTP shares.  The partnership sales schedule tells me to enter a figure for gain subject to recapture as ordinary income in column G.  Plus there is a cumulative adjustments to basis. How would I enter this in lacerte?  I have the K1 with the sales schedule and the brokerage 1099.  Thank you 

[George4Tacks]

https://proconnect.intuit.com/community/help-articles/help/sale-of-partnership-interest-reporting-or...

If you need more, add a comment

[LSTAX]

I saw that as well, but still need a little help.  Here is my example if you can help:

1099-B  under type E, shows 50 shares of a MLP sold with proceeds of 15,000 and cost of 27,000 .

The final K-1 has a sales schedule for that transaction:

Column 3 (Sales Proceeds) is zero.  Column 4 (Purchase Price/Initial Basis Amount) is $26,500.  Column 5 (Cummulative Adjustment to Basis) is  -9,000.  Column 6 (Cost Basis) shows $17,100.  Column 7 (gain subject to recapture as ordinary income) is $3,600.  Column 8 (AMT Gain/Loss Adjustments) is -85.

I am entering on 17.10 dispositions screen -  $15,000 for sales price but I'm not sure what/how to enter cost to show the adjustments.

Is cost equal to column 6 of the sales schedule 17,100 less the cumulative adjustment in column 5 -9,000?  How do I get the gain from column 7 onto 4794 part II line 10 or FOrm 8949 column G per the instructions?

How do you enter the cost elements correctly in Lacerte screens?  

[LSTAX]

I'm getting closer by following the instructions and entering two transactions per your link.  I can make column 7 gain subject to recapture  go on 4797 by entering just the gain amount as sales price and no cost and -1 in Depreciation allowed to trigger the 4797. That works and taxes at a higher rate.

The second scr 17 entry for capital gains - Do I enter the sales amount minus the 4797 amount and cost would be the amount from the 1099-B less the cumulative adjustment to basis?  This results in a lower cost and more tax but I think it is correct.  Column 5 cumulative adjustments to Basis is negative - do you read that as lowering the cost?

[George4Tacks · Accepted solution]

I don't have the program handy, but I remember that it has something to do with making adjustments to the gain(loss) shown on the 1099B. This should hopefully get you there https://proconnect.intuit.com/community/form-1099-b/help/generating-form-8949-column-f-for-various-c...

[LSTAX]

Yes! Entering an amount to "Other adjustment to gain or loss (-1 for all)" flows to 8949 column (g).

Do you think the -9,000 figure in cumulative adjustments to basis on the sales schedule column 5 should be entered and show as a positive in column (g)?   That's my only missing piece besides AMT which won't apply.

[George4Tacks]

I won't confirm you math, but remember that you did report part of that adjustment as ordinary income, so take that into consideration. 

[LSTAX]

I made two entries on disposition screen 17. 

One for the gain subject to recapture as ordinary income $3,700.  It goes to the correct place 4797 II line 10.

For the second entry I used the 1099-B amounts for sales and cost so they tie to the brokerage statement.  On the 8949 box E I have an adjustment to gain or loss column (g) $5,300  which is the 9,000 cumulative ajustment to basis less the $3,700 ordinary gain.  This positive $5,300 results in less of a loss.  The 1099-B without the adjustment would be a loss of $12,000.  Now the loss is $6,700.

No need to do the math, just asking if my logic for reporting is correct.   

Thanks! 

[LSTAX]

FYI - thanks for all of your help.  I spoke with the PTP's tax department and they agreed with the adjustment for the gain subject to ordinary income recapture and said the negative cumulative adjustment to basis is the allocation of income, losses, deductions and distributions to the units since purchase and should lower the cost basis.  I removed the **bleep**. adj number from the 8949 column (g) leaving just the ordinary gain as adjustment to gain and lowered cost by the cumulative adjustment to basis amount.  It had the same tax effect but I think this is how it should look.