Hi sprstpd, I went back and added up the prior year K-1's and they did tie to the accumulated adjusted tax gain basis I received recently. What I did was add the accumulated adj tax basis to the basis I report on the 1099B (E*Trade: $13,631.47 + $18,961 = $32,592). I hopefully will not get audited or asked follow up questions by the IRS but if I do I can send them all years K-1's and show them I paid on these gains in prior years. You agree? Thanks in advance.
I have never held these K-1s for long periods of time, so I do not understand why there would be a difference between Box L Current year increase (decrease) and Cumulative Adjustment to Tax Basis column. The video that you linked shows examples where they are different, but I've never experienced a K-1 like that yet. It seems like if you've been reporting your K-1 partnership income all along (2014-2017) and are now exiting the position (so you can apply the cost basis adjustment), then your taxes will be correct.
That is exactly what is happening. I exited the position on 6/15 (never to own stock or ETF that is a K-1) and applying the entire cumulative adjusted tax basis.
My K1 doesn't have the last page in the video showing cumulative adjusted etc. I'm assuming it's cause never sold only bought over years. Well didn't know what I know now since not under a broker anymore. . . eyes opened. Still no updated word from my tax person I sent the info for how I got the cost basis. Just hoping it's applied to the form correctly. No news is good news I'm hoping.
Since you did not realize your loss until 2018, the problem is that you have to pay the partnership activity taxes along the way. So if you have a 100,000 number in box 11 C on your 2017 K-1, you'll have to pay taxes in 2017 on that 100,000 income and adjust your cost basis in the position accordingly. In 2018, you can realize the capital loss (including the 100,000 cost basis adjustment), but your total capital loss will be limited to 3,000. You can carry forward any remaining loss that you might have. Sorry to say, you appear to be in the worst situation possible: showing large income that you need to pay taxes on, yet holding a large capital loss for the next year. I sincerely hope that is not your situation. If it is, my sympathies.
You sure? After watching the video several times the cost basis I have (box 8) -2 + (box 11C) 83,904 - (box 13K) 864 = 83,038 on my larger account to use to adjust, but I'm not certain it works like that. According to the video anyways. I could be completely wrong here. My issue with all this is I've never paid a huge amount of tax on something I've not realized yet (still own the shares never sold). Just doesn't make sense to me.
The K-1 flows through to your personal taxes. For example, the 11C box (according to the instructions), flows through to Form 6781, line 1. These gains are taxed at 60% long term, 40% short term, so depending on your tax bracket, the blended rate will be anywhere from 20% to 28%. Let's say your blended rate is 23%. That would mean you would owe $83,904 * 0.23 ~= $19,300 because of this 11C K-1 entry. However, you did not realize the capital loss in 2017 (because you closed the position in 2018), so you cannot take advantage of the cost basis adjustment for 2017. Assuming you closed the position in 2018, then your cost basis increases by something like $83,038, and your loss will be that much greater for 2018. But you'll be stuck with taking a $3,000 total capital loss per year until you use that up. A more positive way to think about this is that you can realize a lot of capital gains tax free until you use up this carried capital loss.
Hello, everyone. This is my first post. I am currently trying to fix an error my accountant made when filing my taxes (the much-discussed double taxation of K-1 and brokerage returns). Here is my question: I am going over the K-1 worksheet and doing the arithmetic, but it doesn't seem like I am just "moving numbers around," as has been mentioned here. For example, I bought 66 shares of SVXY in June 2017 and then sold them in October 2017. The purchase price was $5,282.92 and the proceeds were $6,507.48, for a gain of $1224.56. However, the cumulative adjustment to tax basis is $1,674. This raises the cost basis to $6956.92, which is more than my sell price. Why aren't the numbers adding up? Thank you for any help.
Was that your only trade in SVXY in 2017? The fact that you have to adjust your tax basis by $1,674 upwards implies that you received $1,674 in income reported on your K-1. So your basis compensates for the income reported. Without looking at the K-1, it is hard to be any more specific.
If you had paid tax in the past on your SVXY gains through your K-1,. then those gains were considered section 1256 gains. You can take your loss in 2018 and apply the loss to your past tax returns to offset those gains in prior years. I'm sure you did this right? You can do this because SVXY is considered section 1256 and is subject to 60/40 gain loss treatment, and it also allows you to amend your past returns with a loss, applying the loss to those past returns to get back the tax you paid. This is called a loss carry back and is allowed with SVXY.