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Posted by removeps-groups@yahoo.com on April 22, 2008, 3:05 pm
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On Apr 21, 7:04 pm, kam...@panix.com (Arthur Kamlet) wrote:
> >Could it be that the corporation earned dividends which were reported
> >on line 6a (ordinary dividends) but then re-invested those dividends.
> No.
>
> See the OP. This is a publicly traded partnership in which OP is a
> limited partner.
I don't understand. Some LLC's, for example Alliance Bernstein (AB),
pay dividends. If those dividends are automatically reinvested, as
dividends from a mutual fund may be automatically reinvested, then
that adds to the capital basis. If this is the case, then the sum of
line 19 may be be larger than the initial investment, but still less
than the actual investment (which is initial investment plus re-
investments), and in this case there would be no excess to report on
Schedule D.
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Posted by Arthur Kamlet on April 22, 2008, 3:22 pm
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>On Apr 21, 7:04 pm, kam...@panix.com (Arthur Kamlet) wrote:
>
>> >Could it be that the corporation earned dividends which were reported
>> >on line 6a (ordinary dividends) but then re-invested those dividends.
>
>> No.
>>
>> See the OP. This is a publicly traded partnership in which OP is a
>> limited partner.
>
>I don't understand. Some LLC's, for example Alliance Bernstein (AB),
>pay dividends. If those dividends are automatically reinvested, as
>dividends from a mutual fund may be automatically reinvested, then
>that adds to the capital basis. If this is the case, then the sum of
>line 19 may be be larger than the initial investment, but still less
>than the actual investment (which is initial investment plus re-
>investments), and in this case there would be no excess to report on
>Schedule D.
My last comment was directed at the statement that this was a
corporation.
We don't really deal with Distributions in a corporation.
I assume AB is treated as a PTP and not as a corporation?
If so, then your basis is your original basis plus dividends
paid to you plus reinvested amounts. Even capital gains
distributions you are paid add to your basis. And that is true
even if you do not do any reinvesting. In most cases if the PTP
tracks your basis, I would use their figures.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by removeps-groups@yahoo.com on April 23, 2008, 11:11 am
Please log in for more thread options On Apr 22, 12:22 pm, kam...@panix.com (Arthur Kamlet) wrote:
> I assume AB is treated as a PTP and not as a corporation?
Yes, AB is a partnership.
> If so, then your basis is your original basis plus dividends
> paid to you plus reinvested amounts. Even capital gains
> distributions you are paid add to your basis. And that is true
> even if you do not do any reinvesting. In most cases if the PTP
> tracks your basis, I would use their figures.
Are you saying that that if AB pays dividends and those dividends are
not re-invested, they still add to my cost basis in AB? That doesn't
make sense to me.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Arthur Kamlet on April 23, 2008, 2:29 pm
Please log in for more thread options >On Apr 22, 12:22 pm, kam...@panix.com (Arthur Kamlet) wrote:
>
>> I assume AB is treated as a PTP and not as a corporation?
>
>Yes, AB is a partnership.
>
>> If so, then your basis is your original basis plus dividends
>> paid to you plus reinvested amounts. Even capital gains
>> distributions you are paid add to your basis. And that is true
>> even if you do not do any reinvesting. In most cases if the PTP
>> tracks your basis, I would use their figures.
>
>Are you saying that that if AB pays dividends and those dividends are
>not re-invested, they still add to my cost basis in AB? That doesn't
>make sense to me.
That was sloppy of me. I agree with you.
Also if AB recognized accrued interest paid, and passed that to
you on a K-1, it lowers your basis.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by DF2 on April 25, 2008, 8:02 am
Please log in for more thread options In misc.taxes.moderated, Art wrote:
>
>I'm a shareholder (or "limited partner") in several publicly traded
>partnerships whose distributions are mostly returns of capital that
>reduce my cost basis as they are paid out. I'm trying to calculate my
>tax basis in each PTP, because when it reaches zero the distributions
>become taxable--and also because I might sell them. The trick is
>knowing when it's zero.
>
>Each PTP's annual K-1 sent to shareholders shows a Partner's Capital
>Account Analysis in Box L. But the IRS instructions for K-1/1065 warn
>that Box L "cannot be used to figure your basis." Anyhow, some of
>those Box L bottom lines are already in negative numbers, which the
>instructions tell you not to use.
I have not have that happen. If I did, I guess I would consider
using zero if the number went negative. But that is a non-expert
guess.
>
>On p. 2 of the IRS instructions, there's a "Worksheet for Adjusting
>the Basis of a Partner's Interest in the Partnership" but it requires
>some expert understanding of the K-1 entries and how they interrelate,
>from year to year.
>
>So is it OK to just deduct from my original cost the cumulative
>distributions since I purchased the shares? Probably not. Some parts
>of the distributions were NOT return of capital but passive income,
>interest,
I agree that is an important point; many distributions are not
return of capital and are taxed in their various ways on each return
This is an interesting topic that few are brave enough to discuss. I
am nothing like an expert and don't have a recommendation. If I saw
the capital account number go negative, I would contact the
partnership by phone or email and ask what a negative number means.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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