Help with a K1 arrrgghh....

Mar 18, 2010 7 Replies

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Toller 16 years ago

I got a K1 for an investment in a ETF called UNG. They have a website that tells you what to put where on your tax return.

On the K1 line 1 (ordinary business income) there is a loss of $358. On Line 11 (other income) code F there is a loss of $1,285.

They say to enter -1643 on Schedule E Line 28(h)A; (non-passive loss from Schedule K-1)

When I do that TaxCut says I shouldn't be entering a negative number there, which makes sense because it says "loss". I am not sure it is even non-passive; isn't my investment passive?

So, should I be entering a positive number, a negative number, or nothing at all?

I called the number on their website and they tell me not to worry about it, as I should completely ignore the K1. So helpful.

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removeps-groups 16 years ago

One of the pages with UNG says UNG is covered by temporary regulations

1.469-1T(e)(6), which says that it is not considered a passive activity.

Based on the regulations enter a negative number. Personally I'd rather carry the loss to a future year when I sell UNG because tax rates will be higher then. My tax program considers the loss passive even though I said (a) it is not considered passive and (b) I was an active participant, because I said (c) it is a PTP. If I said it is not a PTP then the loss would be allowed (because of my answers to questions a and b).

Well, that contradicts their website :).

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Toller 16 years ago

When I tell TaxCut it is a nonpassive activity it enters a positive number there, and a negative number on 1040 line 17. When I force it to be negative, it enters a positive number (income) on 1040 line 17. That can't be right.

Is carrying it to a future year an option? I won't be paying any taxes this year, so a loss won't help me any; but I will pay taxes in

2010 when sell UNG.

Oh how I wish I had never heard of UNG.

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removeps-groups 16 years ago

Call TaxAct.

I'm not aware that you can elect the PTP to be treated active or passive.

If you are in zero income, then the Schedule E loss may generate an NOL. I'll have to research this further.

My friend told me that there are new extraction techniques and that's why natural gas is dropping. Anyway, next time you buy an ETF, ask you the message boards if they do a K-1,

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Tom Healy CPA 16 years ago

Another way is to check

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it has alist of the most common publicly traded partnerships, with links tothe K-1 site. If you find the security you're interested in listedhere, you've seen the "keep out" sign. Enter at your own risk.

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removeps-groups 16 years ago

Sorry, mean call TaxCut.

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Tom Russ 16 years ago

It was funnier the first way.

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Stuart A. Bronstein 16 years ago

And possibly more accurate.

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