Question

K-1 entries in boxes 1, 2, & 3

Forum|Forum|6 years ago
March 15, 2020
2 replies
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My question has two parts:

Part 1: From the research I've done, it seems like if I get a K-1 with boxes 1, 2, & 3 with entries in them I have to file 3 separate K-1's, right? And it would look something like this:

First K-1:

ALL info from the K-1 including Part II J, K, & L

Nothing in boxes 2 and 3

Second K-1:

Nothing but box 2 (not even Part II J, K, & L)

Third K-1:

Nothing but box 3 (not even Part II J, K, & L)

Does that look correct?

Now for part 2:

I got a K-1 from Energy Transfer L.P. (ET) and they are evidently 3 different passive entities according to what the Supplemental K-1 Information Sheet shows. So it seems to me I'll have to fill out 9 K-1s based on the above info and what they sent me in my K-1. Please see the attached picture as an example, to understand what I am talking about.

If that assumption is correct then I'm guessing that only the very first of the 9 K-1s would have the info from Part II J, K, & L and then none of the other 8 would have anything but the appropriate "0" in box 1, 2, or 3, right?

Thanks for the help, I appreciate it!

D

DianeC958

Yes, you are correct that you will need to have the 3 K-1s and the second and third K-1s will only contain information in Box 2 and Box 3 respectively.

Yes, you are correct that you will need to do the same for the additional K-1s you received.

Do not put zeroes in the boxes that do not have a number or for Box 1 and Box 3 when you enter the K-1 with information for Box 2 and the same for any K-1 you enter. Entering zeroes in boxes with no amount may cause issues during the review.

Only enter the amounts in the boxes that have amounts of 1 or more.

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S

Sam78Author

Thank you so much!

Just to make sure I understand you correctly, besides the first K-1 which should have 0's where shown on the form, the subsequent K-1's should be left completely blank except for the 0's in boxes 2 or 3, right?

D

DianeC958

No, if any box on your K-1 contains a 0, you do not need to enter a 0 for that box. The only boxes you need to enter information for are boxes that contain a number greater than 0.

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T

ToddL99

Please clarify - you only received one K-1, correct?

For "Part 1" of your question - If the "master K-1" reported income in more than one line, then you have to complete a separate K-1 interview for each line - just as you described above.

For "Part 2" of your question - You do not need to make separate K-1 entries for lower-tier partnerships reported in the supplemental information; that information is already in the "master K-1".

If selling a partial interest, you can report that sale in any one of the K-1 interviews you had to do because of multiple types of income.

Reporting the sale of a PTP is complicated. The following post provides detailed instructions on how to accomplish this. Look at the first answer for instructions, and then look at the follow-on replies for additional information.

Reporting Sale of publicly-traded limited partnerships

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sparky8

@ToddL99 thank you so much! Yes, I did not know what I am running into when I bought ET. So much to learn, but with the help from you and the TT community, I think I will nail this down eventually :-). I am reading through all the posts :-).

Yes, I only got 1 k-1 from the master PTP, I wish it is ok not to split to sub-ptp level, it is so much easier and less confusing! But other posts had different opinion. Even on my k-1 form, it said "However, the application of the passive loss limitations to tiered PTPs is not entirely clear, so you should consult your personal tax advisor as to....". Sigh, seems like it is NOT something that is straightforward.

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ToddL99

That statement ("However, the application of the passive loss limitations to tiered PTPs is not entirely clear....) is a legal disclaimer because the issuer really doesn't know how passive loss limitations might flow through and affect an individual investor's tax return - in the vast majority of cases, they won't.

Unless you have a significant investment in this partnership and there are significant passive losses in the lower tiers, this issue should not have a material effect on your return.