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

[dlaccounts60]

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)?

[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...

[dlaccounts60]

@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!

[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.

[AjayShahnc]

Hi @nexchap 

Thanks for all your help with K1 for MLP.

I have the following question.

1. I have MLP for less than a year (Short term) Bought on 10/23/2019 and sold on 3/19/2020. After completing K1 interview, I am also having the same issue. Gain subject to capture as ordinary income is not reported in  column G on 8949 and hence it is 0. However,  it is adjusted in the cost basis Column E of 8949. It is also included in form 4797 part II line 10. So I am assuming that there is no issue that way. Am I missing anything?

2.  I have sold my ET, MPLX and OASIS all 3 MLP through broker. Do I require to file  IRC Sec 751 statement? If So, do I efile my federal tax through TT and then I send the 751 statement to IRS? What should be declare or report in this statement. Where do I send this statement?

3.Is there a support number by TT where we can call and clarify our doubts?

Thanks in advance.

Ajay Shah

[nexchap]

@AjayShahnc 

1. There are 3 numbers that need to be correct:  any K-1 income/loss on Sched E, the Ordinary Gain on form 4797, and the Cap Gain/Loss reported on Sched D.  The first one will be handled by TT if you simply enter in the K-1 correctly.  The second one is populated by TT when you enter it into the K-1 sales section.  But the 3rd can be filled out in a variety of ways (all being valid -- just different ways to get to the same place)  which is why I put together the thread referenced above.  There is no requirement that the Ord Gain show up in col g of 8949, and in the vast majority of cases it won't.  So use the Sales Schedule provided on the K-1 to calculate the cap gain/loss, then adjust as described in that thread.
2. The fine print on each K-1 will tell you if you need to file Sec 751 statements, and the wording.
3. Here's the link to the TT 'Contact Us' page:  https://support.turbotax.intuit.com/contact/

[AjayShahnc]

@nexchap 

Thanks for the detailed reply.

With regards to point#2 Sec751 Statement filing. Can I efile my tax return through Turbo Tax and then separate statement to IRS or I have to mail my tax return with the statement to IRS as I can't efile my tax return due to the requirement of this statement.

Next question is if I can efile my tax return through turbo tax online and can send just the statement to IRS then in addition to statement what should I include in covering letter. e.g. Tax year, our SSN? Where do we send this statement?

Thanks in advance.

Ajay

[nexchap]

@AjayShahnc You should post this as a separate forum question.  It may be possible, but I don't know the answer (I just file by mail).