About 20 years ago I was gifted shares in a limited partnership and in 2021 that limited partnership ended (was dissolved). In the final K1...* I have values filled out in section II.L (Partner’s Capital Account Analysis). Beginning is a small value, and ending is 0.* My final distribution is in section III, item 19A* I have values in part III in these fields: 1, 9c, 10, 17a, 17b, 18c, 19a, 20ag, 20n, 20z My general question is how to enter this K1 into TurboTax including the ending of the limited partnership. My guess (with a lot of questions!) is…In “Describe the Partnership” I selected “This partnership ended in 2021”In “Describe Partnership Disposal” I selected “Complete disposition.” – Was this correct?In “Tell Us about your sale?” I wasn’t sure so selected “Sold Partnership Interest” – Is that correct?In “Enter Sale Information”…I put “Sale Price” as my last distribution from 19A -- ???Selling expense – 0Partnership basis – 0 – should I have put the small amount from the beginning of the year in section K1 II.L?Ordinary gain – I put the value from the K1 part III, item 1 – is that correct?1250 gain – I put the value from the K1 part III, item 9c – is that correct? Should it be the value from item 10 instead?

Actually you have done a pretty good job in your attempt, but I will add some commentary:While this may not be what you want to hear, but when you were gifted the interest 20 years ago, you should have been provided with the tax basis of that interest at the time of gift.Hopefully you have this, as if you don't, you really don't have complete information to determine your overall gain or loss.The information on the K-1 Part II line L is tax capital. This is generally, most of the time, not the same as your outside tax basis. This reporting was just recently mandated and people think this is their basis in the investment and it's not. This represents each partners tax basis of the assets in the partnership.Your selling price noted is correct; your liquidating distributionIf your K-1 does not have any footnote regarding ordinary gain, leave this blank. Part III line 1 has already been reported and should adjust your tax basis; which we haven't determined if you have this schedule.Section 1250 gain is correct - line 9cI think your other responses to the TT questions are goodThe real key here is the question of your partnership basis. Let me know if you either have this or don't. If you don't, how many past year K-1's do you have?Or is this just not a significant number that it's not worth the effort of trying to determine a more accurate partnership tax basis?

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AJ80

Question

K1 and Disolution of limited partnership

Forum|Forum|4 years ago
February 21, 2022
2 replies
0 views

About 20 years ago I was gifted shares in a limited partnership and in 2021 that limited partnership ended (was dissolved).

In the final K1...

* I have values filled out in section II.L (Partner’s Capital Account Analysis). Beginning is a small value, and ending is 0.

* My final distribution is in section III, item 19A

* I have values in part III in these fields: 1, 9c, 10, 17a, 17b, 18c, 19a, 20ag, 20n, 20z

My general question is how to enter this K1 into TurboTax including the ending of the limited partnership. My guess (with a lot of questions!) is…

In “Describe the Partnership” I selected “This partnership ended in 2021”
In “Describe Partnership Disposal” I selected “Complete disposition.” – Was this correct?
In “Tell Us about your sale?” I wasn’t sure so selected “Sold Partnership Interest” – Is that correct?
In “Enter Sale Information”…

I put “Sale Price” as my last distribution from 19A -- ???
Selling expense – 0
Partnership basis – 0 – should I have put the small amount from the beginning of the year in section K1 II.L?
Ordinary gain – I put the value from the K1 part III, item 1 – is that correct?
1250 gain – I put the value from the K1 part III, item 9c – is that correct? Should it be the value from item 10 instead?

TurboTax Home & Biz Windows

Anonymous_

I will page @Rick19744 but you might want to read through the thread at the link below.

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

Rick19744

Actually you have done a pretty good job in your attempt, but I will add some commentary:

While this may not be what you want to hear, but when you were gifted the interest 20 years ago, you should have been provided with the tax basis of that interest at the time of gift.
- Hopefully you have this, as if you don't, you really don't have complete information to determine your overall gain or loss.
The information on the K-1 Part II line L is tax capital. This is generally, most of the time, not the same as your outside tax basis. This reporting was just recently mandated and people think this is their basis in the investment and it's not. This represents each partners tax basis of the assets in the partnership.
Your selling price noted is correct; your liquidating distribution
If your K-1 does not have any footnote regarding ordinary gain, leave this blank. Part III line 1 has already been reported and should adjust your tax basis; which we haven't determined if you have this schedule.
Section 1250 gain is correct - line 9c
I think your other responses to the TT questions are good
The real key here is the question of your partnership basis. Let me know if you either have this or don't. If you don't, how many past year K-1's do you have?
- Or is this just not a significant number that it's not worth the effort of trying to determine a more accurate partnership tax basis?

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

AJ80Author

Hi Rick19744,

Thanks so much for the assistance!

I was not provided with the tax basis 20 years ago. I do have every tax return and K1 since then. Will that help?

ZoltanB45

Just enter the amount of equity you still had in the business at the time of selling your share. That includes your share of the profits of the final year which were not distributed.

Look at the beginning capital account of the final return, add any contributions, deduct the distributions and add your share of the profits during the year (or deduct your share of the losses). The only reason I laid it out like this is, because you might have a zero ending capital account balance on your K1. Normally you would just take the ending capital. This is not a valuation by any means, but it will be good enough in recording the gain or loss on the sale.