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Enterprise Products Partners L.P. Message Board

  • the_alchemist_50 the_alchemist_50 Apr 1, 2012 1:59 PM Flag

    Does share of Nonrecourse liabilities affect basis?

    Basic question - by buying DEP or EPD stock/units, do I have any money not at risk? If so, how do I correctly determine the amount not at risk, using the info on K-1?

    This is my first year trying to do the K-1s with DEP and EPD (I was a previous DEP owner). I have spent 10+ hours trying to figure this out which is ridiculous.

    Anyway, I think I have most of it ready but have a question when determining the amounts I have not "at risk".

    Form 6198 line 9 implies that nonrecourse loans affect your basis in that you decrease by any changes in these amounts.

    If someone has a straightforward way of transferring these K-1s (especially with the merger complexity) onto a 1040, please share a link. If I knew it was this complicated, I would have sold out a while ago into a non-MLP company. Now I'll be stuck for tax year 2012 as well.


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    • I assume the whole investment is at risk.
      After all any security can go to zero.

      • 1 Reply to lizahuang54321
      • A couple comments -

        Non recourse basis does not effect taxes.

        Once your capital account goes to zero all distributions are LTCG.

        On a partial sale TTax is difficult and I suggest a good cpa versed in MLPs.

        If no sales or complete sale then TTax handles easily.

        In over simplified explanation. If you paid $20and current capital account is zero on a sale at $50 you would have $20 in ordinary income and $30 in LTCG.

    • I think "Ending Capital Account" from K-1 box L is your basis of what you still hold at the end of the year if it is positive. Basis cannot go negative.

      From what I have read, if you sold totally out, "Ending Capital Account" will be zero, and the EPD basis is the absolute value of the box L "Withdrawals & Distributions" box of the final EPD K-1.

      I don't know how the Non-recourse liability would affect the basis, but I figure the accountants that prepare the K-1 have taken everything into account.

      If you sold part, I don't know offhand how to determine the basis of the partial sale.

      You might wait a bit to get contrary opinions before doing your taxes with this information in case I have a misunderstanding.

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