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Financial Planning / Tax Strategies


Subject:  Re: My first ever "Notice" Date:  7/4/2012  8:36 PM
Author:  ptheland Number:  116393 of 127613

QUESTION 1 - Is this $4776 my adjusted cost basis ... or should I have reported the $4993 which I actually paid as my cost basis?

Probably neither is correct. Your basis is what you originally paid, plus all of the taxable income you reported for the years you owned it, less all the flow through deductions you reported, less any distributions, plus or minus a few other things I've deliberately omitted for now.

Their notice to me states that the sale of CODI for $5522, which was reported to them by my broker, was NOT included on my return -- and they recomputed my taxes using a zero cost basis. They apparently missed the Form 4797, and the carryover gain to Schedule D, Line 11.

That's because it really should have been reported on schedule D to begin with, not on form 4797. (Well, not all of the sale, anyway. Perhaps some should have been reported on Form 4797, but you'd need to look at the materials accompanying your K-1 to determine if any of the sale should be reported on Form 4797.)

QUESTION 2 - Do I owe the IRS more, less, or exactly what I paid --

No way to know for sure without looking at all of your returns for the time you owned it plus all of the K-1s from the partnership.

and do you have any advice for handling this?

The IRS will probably go away if you write to them, saying you reported the sale on Form 4797. Including a copy of the 4797 can't hurt.

I am not saying that your basis was correct. But if you show the IRS where you reported the sale, they probably won't inquire further.


PS - As a tax pro I also hate Publicly Traded Partnerships. They're a pain in the neck to deal with and I can't charge enough for the work. Plus I feel PTPs should be taxed as corporations.
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