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on which form to report sale of PTP

On which form does one report the sale of a PTP? I always thought it was Schedule D. But some posts here have been saying to use form

4797. What are the differences between the two forms?

It looks like on form 4797, you cannot report a loss from a passive activity because in the instructions there is a section "Passive Loss Limitations". This doesn't make sense because if you buy a publicly traded stock symbol and sell it at a loss, you should be able to take the loss.

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removeps-groups
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There may be two kinds of gains and losses associated with the sale of a PTP and therefore both forms may need to be used:

  1. Capital gains or losses are reported on Schedule D.
  2. Ordinary gains or losses are reported on form 4797.

The amounts associated with 1. and 2. are reported to you on a "Sale Schedule" provided to you by the PTP after the sale. Use the amounts shown in the "Sales Schedule" to fill out Schedule D and/or form 4797.

Reply to
Kadaifi

Thanks. How does the partnership determine these amounts?

Reply to
removeps-groups

Basically, the amount of the tax free distribution you originally received from the PTP less certain adjustments e.g. depreciation, etc is taxed as ordinary income and reported on 4797. This plus some other items are used to adjust your cost basis for calculating your capital gains and reported on Schedule D.

For an example of a simplified calculation, see Attachment A in the document located at:

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Reply to
Kadaifi

See if

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something for you. That is a royalty trust, but some thingswill apply to a PTP.

Reply to
DF2

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