|
|
MLPs
|
|
||
check your K-1s...errors are common; a KMP examplePassAndShoot’s advice about checking your K-1s is both very important and very timely. Ever since I started doing my now 96-year old dad’s taxes in ’05 (which include ~14 MLPs), I have found an error on at least one K-1 each year. It’s never the same MLP from year to year. This year I have only looked at one K-1…KMP, and it has is an error and/or problem that is pretty glaring. This year the error is in Dad’s favor (although I will get it corrected). This year’s error arose because he moved brokers. After 50+ years of paying high commissions at Wells Fargo (and predecessors), he moved his entire personal trust to Schwab. All of the stocks and MLPs were simply transferred directly. Fractional shares/units on each investment had to be sold (he reinvests dividends/distributions a lot), but whole # of shares/units went over to Schwab. All well and good; leaving behind one pissed off WF broker, and his whole investment trust consolidated at Schwab. Then the TY 2012 KMP K-1 shows up. It will make the story easier to see 3 years of his K-1.
2010 & ‘11 were pretty typical years. Although he was reinvesting distributions those years (perfectly offsetting the payment of the distributions), he still ended up being credited with a loss of invested capital each year. Then in late May/early June 2012 he moved his KMP to Schwab. The Transaction Schedule shows what happened (on paper) clearly; WF sold the fractional unit he had, and moved the 284 whole units. Broker # 912 (Schwab) is shown as getting the +284 units, and Broker # 141 (WF) is shown as loosing -284 units. BUT the capital account gets largely re-set. KMP was selling for about $78/unit about the time he moved to Schwab. The value of his units when they were moved was about (284*$78 = $22,152) Somehow his K-1 is showing his new capital balance is (old cap balance) + (value of KMP coming in) = new Cap. Balance (-$3,591) + ($22,152) = $18561 (minor error in rounding…I’m off by $12) I strongly expect this is an error. If anyone can explain this as a not-error, please let us know. If the K-1 is in fact accurate and others would get the same treatment, there is a wonderful tax advantage here. I don’t believe in the tooth fairy or that moderate Republicans are not an extinct species, so I suspect there is an error. If the K-1 is accurate, then Dad went from having to pay LT Cap. Gains tax on most of his distribution (because his Cap. Balance was negative) to once again enjoying a full tax postponement. Since Dad is 96, and has absolutely zero intention of ever selling any of his core holdings (some held for 50+ years, almost all for at least 10 years), this isn’t a matter of putting off paying taxes to a later day. What’s wrong with this picture? Any help from anyone, please? |
return to message board, top of board |
Msg # | Subject | Author | Recs | Date Posted |
29076 | Re: check your K-1s...errors are common; a KMP example | rlp2451 | 0 | 3/5/2013 3:31:32 PM |
29077 | Re: check your K-1s...errors are common; a KMP example | andersonole | 1 | 3/5/2013 3:56:37 PM |