Where to Enter Income from Sale of a Partnership?

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RClayton
RClayton Member Posts: 2 Newcomer

I am trying to enter information from the sale of units in a partnership.

According to https://www.freetaxusa.com/forms-federal you support “Partnership or S corporation income (Schedule K-1)” form 1065 and you also support federal forms 4797, and 8949. On the same page at the bottom under "Items not Supported", I don’t see anything listed about not supporting a partnership sale.

On the Business Income/Partnership Income (K-1) workflow, it asks the question “Did the partnership end or did you sell all of your interest in it during 2023.”

What does or what should this question do?

If I answer yes or no I cannot see that it changes the workflow or asks about income from the sale. I have a partnership sales schedule showing a sales proceed amount with instructions to report it on form 8949 column D and an amount described as “gain subject to recapture as ordinary income” with instructions that this gain should be reported on form 4797 part II line 10, and form 8949 column G. I see these forms included in the federal draft output, but of course these amounts are not shown because I cannot find where to enter them.

When answering yes to the question “Did the partnership end or did you sell all of your interest in it during 2023” where do you enter information regarding the sale?

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  • Henry
    Henry FreeTaxUSA Agent Posts: 86
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    Hi RClayton, it sounds like you may be trying to report the sale of shares of a publicly traded partnership (PTP). Is that correct? If it is a PTP, a box will be checked in Part I, box D of your Schedule K-1 where it says, “Check if this is a publicly traded partnership (PTP)”.

    Unfortunately, our software does not currently support filing with a Schedule K-1 for PTPs. If you have this type of K-1 to report with your return, we will not be able to help you complete your return as needed this year. I apologize for any inconvenience this may cause.

  • RClayton
    RClayton Member Posts: 2 Newcomer
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    Yes this is a Publicy Traded Partnership/MLP. Thanks for the confirmation Henry. This would be a great thing for your marketing team to point out under the "Items not Supported" on the page I cited above.

    Or better yet, have a Part I, box D question on the K1 workflow after asking “Did the partnership end or did you sell all of your interest in it during 2023.” that warns customers PTP sales reporting is not supported.

  • Henry
    Henry FreeTaxUSA Agent Posts: 86
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    Thanks your feedback! I will pass this on to our development team for consideration — we are always looking for ways to improve our software.