Energy Transfer (ET) K-1 Preferred Stock Series Redemption

Forum|Forum|10 months ago
May 30, 2025
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Energy Transfer had a mandatory redemption of Series E Preferred Units.

This transaction did not show up on my brokers 1099 in any form (not even as non covered).

In addition the tax package has no information on ordinary gain, etc.--just a standard K-1.

I am working to submit my taxes but kind of stuck.

Any help or suggestions?

Bsch4477

From the Web:

The mandatory redemption of Energy Transfer's Series E Preferred Units by Energy Transfer LP had tax implications for unitholders, treated as a distribution in full payment in exchange for the units. The redemption price, including accrued distributions, was considered a capital gain or loss, depending on the unitholder's basis in the units.

Elaboration:

Redemption as a Distribution:

The redemption of the Series E Preferred Units was treated as a distribution in full payment in exchange for the units, according to Section 302(a) of the Internal Revenue Code. This means the unitholders received a cash payment in exchange for surrendering their Series E units.
Taxable Gain or Loss:
Whether the redemption resulted in a capital gain or loss depends on the unitholder's adjusted tax basis in the Series E units compared to the redemption price, including accrued distributions.

If the redemption price exceeded the unitholder's adjusted basis, a capital gain would result, which is generally taxed under normal capital gains rules.

If the redemption price was less than the unitholder's adjusted basis, a capital loss would result.
Tax Basis Adjustment:

The redemption would also affect the unitholder's tax basis in any remaining Energy Transfer units they hold. The redemption would decrease the tax basis of the unitholder by the amount of the cash distributions received in the redemption.
Accrued Distributions:

Accrued distributions on the Series E units were also considered part of the redemption price. These distributions, along with the redemption price, would be used to determine the capital gain or loss.
Unitholders' Responsibility:

Unitholders are responsible for determining the specific tax consequences of the redemption and reporting them on their tax returns.