Perhaps you more experienced partners can - please -confirm a tax question for me.
This is my first tax season dealing with limited partnerships. I've read throught the K-1 instructions and it seems to say that despite a positive Ordinary business income (Part III, box 1), I can subtract section 59(e)(2) expenditures (Part III, box 13J) and "Depletion information - oil and gas" (Part III, section 20T).
Now that leaves me with a four digit negative number.
Am I full of...wishfull thinking to imagine that I have no tax liability? That don't sound like the IRS, my friends!
Please tell me where I have gone off into dreamland, here.
Thanks for any input.
as jrad said you have no current tax liability after deduction of depletion plus you can also deduct intangible drilling costs to arrive at current adjusted net income which should get you close to line 20v value which is used for ubti in ira's
Yes, you have a negative number, but unless you sold the partnership in 2012, you can't deduct it. It's a passive loss and its use is limited to offsetting income from the same MLP. So you carry forward the loss until such time that the MLP generates positive income, or you sell it.