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Atlas Pipeline Partners, L.P. Message Board

  • jdnc123 jdnc123 Apr 12, 2012 6:42 PM Flag

    k-1 question

    I see this has been addressed before, but I owned APL for a short period of time in 2011. I had about a 70k gain on the units i owned, which of course i have to pay short-term tax on. I am then showing 122k in box 9a, which is giving me a 44k hit to my taxes (state and fed)....before filing NR taxes, which I am sure will increase the amount. Am I to believe I bought and sold units in APL for a gain that will more than be eaten up by taxes when its all said and done. Amazingly bad investment on my part if so.

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    • First and foremost - You do not report your K-1 MLP sales via a 1099. Take that out and the numbers should make sense.

      Second, you are not double taxed on anything. You get taxed once at eirther Cap gains or ordinary income rates. And yes, MLPs are not a very good way to invest for the short term because of the uncertainty in allocations.

    • Sorry I can't help more, but I've got a few tax returns to finish.

      I will only say that, in general, the results you're seeing don't make sense to me. My best guess is that your gain was more than $ 70,000 (maybe that was the difference between the buy and the sell, but excludes distributions). My second best guess is that you owned APL for a time in 2010 and you're not picking up the 2010 K-1 numbers. My third guess is that your K-1 is wrong, since you said something about your trades being double counted.

      Lets' start with the simple fact - you had APL short-term. Is it possible that you owned it in 2010, and have some carryover passive losses from that year that you're not factoring in?

      You should be able to reconcile the Adjustments to Basis number to the K-1 numbers, altho as I just said, you might need to look at your 2010 K-1, if you received one for that year. Just add up all of the income lines, subtract the expense lines, subtract the distribution numbers, and you should be (at least close to) at the Adjustments to Basis number. If you're not close, then I think there might be something wrong with your K-1. You said something about your trades being double counted; maybe that's part of the problem.

      In your first post, you said you made $ 70,000 on APL. I assume you held it long enough to get a few distributions? If that's the case, maybe your gain wasn't "only" $ 70,000. Maybe you made $ 70,000 on the buy and sell, and also got some distributions, which makes your taxable gain more than $ 70,000?

      And I have to point out the possibility of the K-1 simply being wrong. I owned EROC in 2011 and sold it. My K-1 Sales schedule doubled up on my buy - it showed I had bought 4,000 units, whereas I had only bought 2,000. I called the K-1 number and immediately they emailed me a corrected K-1 with smaller numbers on it. But they never changed the Sales Schedule, so my adjustments to basis and ordinary income, etc were all wrong. Instead of calling them back, I reported the correct numbers on my Schedule D/4797. I have no idea how these MLPs prepare their tax returns, since they make many corrections, but only issue new K-1s to the people who complained.

      Good luck.

    • in tt after the screen that asks for capital account information there is a screen that says "describe the partnership" and check 4th box down disposed of portion of my interest, then next screen says "tell us about your sale" and in first box click sold partnership interest

    • a couple notes...i finally figured out my apl trades were being double counted in my 1099, so that reduced the tax burden shock by taking those out and only filing in k-1 schedule, but net, net it seems like my tax is about 13k higher filing through the k-1 versus had i just left the 1099 entries and not filed the k-1. i assume that is related to the 122k lt cap gain. i figured out the way to force it to a full disposition to get the line 1 offset, but still paying more taxes than i would have if this was a c-corp investment. the other problem is moving the gains from the 1099 to k-1 leaves me with 20 yrs of investment losses to write off!

    • incredibly helpful info. my line 1 number is -31k, so even with that, the total of the basis adj and line 1 loss is only 87.5k, far less than the 122k and no way did i get that amount in distributions. have a -35k in box 20 v. i am using turbo tax but dont see any option to check where i disposed of all of it, only a box with a portion of it. is there a screen i am missing or a way to override? best regards

    • Actually, you may have done better than you planned.

      First, you are right, the Line 9a amount is shown on your return as a long-term capital gain.

      But by reporting this gain, your tax basis in your units increases by the amount of the gain, which reduces your short-term gain on the actual sale of your units. Of course, your tax basis gets adjusted for all the income and expense items on the K-1, but the 9a amount should be the largest. So you don't get double taxed.

      Because you sold your units, go to the last page of the K-1 package, the one titled "2011 Sales Schedule". Look at column 5 (Adjustments to Basis). It should be a large positive number. It won't be as large as your $ 122,000 capital gain because it will also reflect the line 1 loss and cash distributions you received, among other things. But it should be a big positive number anyway. That positive number gets added to your tax basis on the units you sold.

      But the point is that, to some extent, you will show a long-term capital gain and a lower short-term gain (or maybe a short-term loss).

      Then, there's the issue of the ordinary gain piece and the deductibility of the line 1 loss, if you sold 100% of your APL units. But you didn't ask about that.

      Hope this helps.

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