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Calumet Specialty Products Partners LP Message Board

  • dsbatch13 dsbatch13 Mar 6, 2013 9:23 AM Flag

    Tax Question regarding K-1

    Just received K-1 tax info. I hold the stock in my IRA. Does the K-1 info need to be included in my 2012 Tax Return?

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    • If in a taxable account then everything on the main page of the K-1 (boxes 1 - 20) should be entered in the correct place on your tax return. Note that distributions (box 19) does not affect your tax, however all the income in boxes 1-11 (and some other items in other boxes) do result in tax liability. The IRS gets the K-1s, so just like you would not omit declaring a W-2 or 1099-INT, you should not ignore the K-1 or the IRS computers will flag it as unreported income. If you sold units, the sales schedule (on a separate page of the K-1) is used to get your basis adjustments and ordinary income for the sale - the sale on a downloaded brokerage report should be removed because it will not take these adjustments into account.

    • If you hold CLMT strictly in an IRA, none of the data in the Form K-1 has any tax impact. However, when shares are held in an IRA, you aren't taking advantage of the long-term capital gains that you get on distributions. If you own shares of CLMT in a regular brokerage account, then yes, certain data from the K-1 has to transferred to your tax return. Over-the-counter tax software does have the capability to help you properly record the items on your tax return forms, but it does, unfortunately, require some work. Also, if you have yourCLMT share outside your IRA, you need to keep track of all cash distributions that you received, as those will be deducted from your cost basis in the stock. The idea is that when you ultimately sell your shares, you will pay long-term capital gains taxes on those past distributions--along with the appreciation in CLMT. Hope this helps.

      • 2 Replies to ralph_adamo
      • A few errors here:
        - you don't track the distributions, the partnership tracks your capital account (shown on the K-1) and it is affected by more than just distributions. When you sell, the adjustment is provided for you on the sales schedule, you don't calculate it yourself based on your distributions.
        -the past distributions are recaptured as ORDINARY INCOME, not capital gains.

      • PS: Although the amount over $1,000 of "unrelated business taxable income"--referred to by "a fan of the cat"--from CLMT would be taxable to you, even though shares are held in an IRA, that is a very rare hurdle to be over for most people. So it basically never comes into play for most people. And even then, if you are holding mountains of MLPs in your IRA, you could open multiple IRA accounts, because that $1,000 hurdle is by account--not by person. And again, if you are holding mountains of MLPs in your IRA, you really should reconsider that strategy--as you're losing out on the tax advantages of MLPs.

    • 1. Get tax advice from a professional tax adviser, not folks on an IBB.

      2. That said, b/c CLMT is an MLP, to the extent that distributions are considered unrelated business taxable income (UBTI) they may be subject to tax, even if held in an IRA. There is an exemption for the first $1000 (from *all* sources), however.

      3. How should you determine if you will have any tax liability on the CLMT you have in your IRA? See #1.


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