My understanding is that current and prior year passive losses are allowed to the extend of passive income in any year, even if the entire partnership is not disposed of during the year. See the example at the bottom of the middle column of page 4 of the little booklet (2014 Partner's Instructions for Schedule K-1) that we get with most tax packages.
I always report portfolio income, lines 5 and 6, interest and dividends. I'm a little confused about Line 9a, net L-T capital gain. Especially for ETP this year. The advice that EPB used to give in 2011 and 2012 was "if the sum of lines 1, 2, 3, 4, 8, 9a,10, 11, 12, and 13J are negative, do not report any amounts from lines 1, 2, 3, 4, 8, 9a, 9b, 9c, 10,11, 12, 13J, 15, and 17." They didn't give that advice in 2013 and 2014, probably because the realize that most individual investors are using a tax software package and its easier for them to always plug in all the numbers rather than to have them do separate calculations outside of the software.
Arbtrdr, can anything offset this years line 9a net LT capital gain from ETP? If I choose to use only the amounts on the first page of the K-1, Part III, rather than tier all of these partnerships, am I going to pay more taxes this year?
Hmmmm. With demand increasing every year in the US and the World, why do you think infrastucture will be overbuilt? There already has been a 30% slowdown in $$ committed for new projects. MLP projects get returns mostly based on volumes carried - NOT THE VALUE OF THE PRODUCTS - and industrial and consumer demand are both increasing and there are HUGE new plants that will use 1M bbl of NGLs a day going into service in early 2016 on GOM. Also 6BCF of LNG exports for 2016/17. Production might decline for oil but it will decline in the expensive areas like canada heavy and the Bakken. NG and NGLs and oil from EF and the such only cost about $20 bbl to pump.
WPZ reduced its payout slightly. Thier problem was a bunch of contracts for processing based on POP and KW and with NGL prices down they could not make money on them. They also lost 18 months of production on the 3B Geismer facility and had problems getting it going again and thus merged with another MLP. Distribution for the old WPZ holders will be exactly the same by Q2 of 2016 with Geismer back on line.
EPHOLDER - There is no leeway on how to report. You report all posaitive numbers on lines 1-10 and hopefully keep track of any passive loss carryforwards. The company has no idea what your passive loss carryforward numbers are - sorry. They will tell you your ordinary gain, but not keeping records - TTax does this correctly - will result in you paying thousands of $$ in taxes. For example I have $12 per unit in carry forward losses from EPD in just 3 years. you also cannot take the passive losses unless you sell ALL your units. Tax treatment is not clear because there are constant changes in the laws.
TurboTax is excellent for K-1s; just follow the bouncing ball. The records will be kept for multiple years. No problem. Only if UBI (unrelated business income) in an IRA exceeds $1,000 is there a problem with taxes.
Oil production in the U.S. is probably going to be significantly curtailed now that the OPEC cartel is essentially defunct, and the days of sky high oil prices are a thing of the past. There's got to be some over building in the energy infrastructure business in this country. It would seem that the industry would be fools to keep building non-committed infrastructure, and demand for existing capacity has to cool down once production FINALLY declines. You may be buying a 7% distribution that eventually has to be reduced. Look at what happened to Williams (WPZ).
One of the schedules in the tax package indicates the "the tax treatment of tiered partnerships is not clear." I interpret that to mean I have quite a bit of leeway as to how if will reflect the K-1 on my return. ETP isn't my one big investment, so not that much can go wrong tax wise.
As long as I have an overall ordinary loss, I just report the portfolio items as income. When the day comes that I sell the entire investment, or the P/S is rolled up, then it won't matter how meticulous I was about reporting. At that time, the company should tell me what my ordinary gain and basis adjustments are. I save all of my K-1's so I know what my passive loss carryovers are. I can just plug in those amounts and the IRS has to be happy what I've done.
The only reason I can see that ETP is down so much is everyone is doing there taxes and pulling their hair out with the K1, or should I say K1s. K1s don't scare me, I have a total of 16, but ETP's really sucks. But I am hanging in there.
The K-1 was available on line on the 13th! Almost 2 weeks ago. Mailing takes about a week to 10 days to receive. Why not do it on line?
If I own partnership units for many years and then die while owning these units, does the beneficiary get the stepped up value as their new basis? I won't even ask what the beneficiary would do with K-1's at that point. Thanks.
To paraphrase Willie Sutton "Because that's where the money is". BTW, I will let you know how much tax from my IRA Schwab sends to the fed as a result of one of my boxes being over $1K as per their request I sent them a copy of K1 to their tax compliance office.
I don't own any MLPs in my IRA or Roth IRA. I can't see the point of owning a tax-sheltered investment in a tax-sheltered account. It just doesn't seem to make sense. Even more so if it might create a tax complication. I have 8000 MMP and 4000+ EPD and 2000 ETP, and I'm expecting my accountant to take me out and shoot me this year. (I'm sure he'll at least give me some dirty looks.)