I have to confess I am completely at a loss as to how to fill in the PA state K-1 in Turbo Tax using the tables EPD gives me. For some of the entities there isn't even an entry for PA and for the few that do have a line,most of the values are 0, except I see for EPD itself, Gross Receipts is 1. Gross Receipts doesn't even have relevancy on the Federal K-1 as I remember, so what should I do with it on the Pa form? (and this is just an example). I can handle the Federal one with relative ease, but am bewildered with the state. Is there some general principle to follow? Is the income reportable to the Feds the same for the state? Turbo Tax asks a million questions in the state interview and I just am not familiar with any of it. Help!
TTAX makes you fill out a RK-1 (or inherit the Federal values). Since that produces the relatively large negative amount on the business income section, I would have expected the state to want to see why you were declaring it, but the RK-1 does not print. If you had a Schedule C that produced a loss, as I have in the past, that form does print, so I don't understand why they would blithely accept the undocumented K-1 generated loss. The only thing that printed out was a little supplemental page that documented the miniscule positive amounts of interest and something else that EPD and one of the other activities generated.
Don't the taxing authorities usually want to know where the summary figures come from?
I think I finally get it where you are confused. There is NO state K-1. The state numbers are ONLY for use in determining if you owe taxes to non-resident states. THey do not effect taxes for your state of residence.
I understand it is probably not as complicated as I feel it is, but the data the companies supply is overwhelming and not geered for the typical individual investor. I did the Federal return correctly last year and I believe also this year. It is only the state that is at issue. The passive losses are showing up correctly on the Federal form and, now that I understand I should just let them flow thru to the state, they are *implied* by virtue of the total calculated for ordinary business income. What is confusing about the state is that TTAx takes you through a process that asks voluminous questions about whether you need to adjust the Federal K-1 amounts, ( I didn't), but the state K-1 never prints and is marked "for your records" on the top. It makes the loss for ordinary income appear to come out of nowhere, but I see it on the informational return. If there are errors in last year's form, they are only at the state level and will only effect me if I sell. After this crush of finalizing all the forms is past, I'm going to get an accountant to review the K-1 area for both year. If I have to amend anything, I doubt it will change any tax amounts, just establish (for PA) the correct cost basis.
The loss flows to your state form but cannot be taken becuase it can only be used to offset gains. You are fighting way too hard and making it more complicated than it really is. State laws vary and most use the Federal AGI as a starting point. I do not know about PA.
Go back through the interview and re-enter the numbers from your K-1 in every box from Box 1 thru Box 10 and Boxes 17A and 18C. Do not bother with Box 13.
You also will need to go back to when you bought EPD and correct the prior year returns. If TurboTax is on your computer simply amend the entries for all MLPs. You need to do this because you have passive losses and will otherwise lose those when you sell and you quite possibly put the data in wrong in prior years.
Entering data for a K-1 only takes a couple minutes. Also talk to someone about the tax consequences of selling as the passive losses/distributions will cause some taxes on sale. A MLP give tax deferral, not forgiveness.
I checked the EPD k-1 since that is the source of the majority of the passive loss. Both the box for limited partner and domestic partner are checked, and none of the boxes under the ordinary income amount are checked. I was incorrect about one thing : even with the loss flowing back to the PA form, it is not reducing my taxes because losses can only offset gains within the same income class in PA. Since the bottom line isn't altered, I guess it doesn't matter what filters back to the PA form, at least not this year, but I still feel like I'm just fudging this and don't really understand what figures should be reported and where. If PA needs to see the loss figure even if it doesn't effect the tax burden, I will need to amend 2010's return because it is completely wrong at the state level.(Obviously I need to find a CPA who understands both the Federal and state tax codes so I don't get myself in a mess in the future.)
Do you not see the passive loss flowing back to your resident state form?
Go to View|Forms. Select the K-1 for the federal return in the left column. I the form, check that you are shown as a limited partner in part II G , and that the boxes under line 1 of part III are not checked.
I'm back. I've overridden nothing at the state level, so the PA state form is picking up the Federal values of negative ordinary business income for EPD and for one other MLP I have. This is giving me quite a sizable offset to my PA income but I thought the losses were only used at the time of a sale. Is this what I should expect at the state level? It's obviously not doing anything special to treat them as passive losses.
"I'm starting to think that the state table is providing values for those who have to file a non resident return"
There is absolutely no question on that score.
That is exactly what it is for. It is not for your home state return because your home state taxes you on all income.
Thanks for your kind approach to my ignorance about my own investment. I'm already angry at myself, so don't need more fuel on the fire. I have worked in forms mode with the k-1 several times and no matter what I enter in any of the relevant columns, except for the Interest income and Net long term gain, nothing changes in my tax liabilities, so it can't be very significant. Even with entering the T1 values, which are the most inscrutable to match up with TTax, nothing effects my bottom line.
I'm starting to think that the state table is providing values for those who have to file a non resident return, so I'm going to do a test copy (I've done many of the type you describe before) to see what happens if I just let the Federal data flow to the state and ignore any specific data entry for PA. Eventually I'll bite the bullet and find someone qualified to explain this to me once and for all. Once the pattern is established, I can follow it until I sell this, and at that point, I'm sure I'll have to get a "pro" to do it.
I'd like to express my sincere appreciation to all who have given me any guidance at all on this. Tax time is always a stress but it's even more frustrating to be a capable adult with years of tax prep experience and not be able to get this one little area.