% | $
Quotes you view appear here for quick access.

Enterprise Products Partners L.P. Message Board

  • phughyoung phughyoung Apr 7, 2011 2:07 PM Flag

    Teppco Passive losses to EPD

    I have used TTAX Premier for the last 4 years. I sold EPD in December 2010. I would like to add TEPPCO's passive losses in to EPD's. Does anyone know the easiest way to do that?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Ordinary gain results from recapture of depreciation and other such items like depletion. Actually your adjustment to basis is not hard to calculate; its equal to the overall change in your capital account through the previous year plus whatever you estimate for the current yr. For the first time, some of the MLPs have "Ordinary Gain calculators" available at the K1 website. I think EPD is among them but haven't looked lately.

    • Yes, TT has tracked the last 4 years, but not the years before that. I added the prior years to the existing TT total.

      What I meant about letting the basis go to zero is that it more expensive to sell and pay taxes on ordinary gain and capital gain that results from basis adjustments than it is to continue to hold the units. After some years the basis will go to zero and all distributions will be taxed as ordinary income. Maybe you are correct that they will be taxed as LTCG, I'm not sure. Maybe there's not much difference.

      My reason for selling was to use some capital losses that I had taken two years ago rather than let them dribble away $3000 at a time. In selling the entire position, it allowed me to buy back in at a new basis. I knew there would be ordinary gain to report and that my basis would be adjusted downward. I had roughly calculated that the ordinary gain would be roughly equivalent to distributions I had received and that basis adjustments would be similar. I was wrong on both counts. Ordinary gain and basis adjustments were both wildly greater than I had planned on. It's a mistake I will not make again.

      Thanks again for your post.

    • I think the Passive loss carryforwards that TT tracks, are cumulative so if you added the amounts from 4 prior yrs then you have "double booked" them. If Box 1 was negative for all 4 years, then your passive loss carryover would be the sum and that should not be difficult to check.

      I'm not sure what you mean by letting the basis go to zero. Once that happens there are no more losses allowed or tracked. At taht points, distributions get taxed as LTCG

      You are right though about the large bill being generated upon sale

    • Here is how I handled the problem:

      I looked in TTAX at the last year of data for TEPPCO to find the passive loss carryforwards. There are 4 fields that carry this data, two of which are AMT adjustments. I made a note of those amounts, then entered them manually into the EPD K-1 in the same place I took them from TEPPCO. That felt to me like a reasonable process. What do you think of that?

      Additionally, since I have only been using TTax for four years and have owned TEPPCO since 2004, it seemed likewise reasonable to add passive losses for those three additional years to the EPD K-1 return as well, and I did that.

      All this points out to me the necessity of keeping track of passive losses for MLPs. They help considerably at tax time to reduce taxable income.

      Anyone who has sold an MLP after even just a few years can be shocked at the basis adjustments and ordinary income that have to be reported, resulting in a surprisingly large tax bill.

      In retrospect, for those don't need the capital for other purposes, it might be better for some people to just let the basis go to zero, then report it all as ordinary income.

      Thanks to everyone who's contributing to this thread.

    • I would think that the TPP passive losses would have been incorporated into the TPP capital account, and that the TPP capital account numbers from the 2009 merger would already be folded into your final EPD K-1.

25.64-0.29(-1.12%)Nov 27 1:03 PMEST