Corrections Log

Sale Estimate and "sold today" figures left your share of partnership liabilities out of the amount realized

Fix shipped September 29, 2026 · Logged September 28, 2026

The K-1 Basis Tracker’s Sale Estimate (both the basic and the bracket-aware version) and the position page’s “What This Means If You Sold Today” figure computed the gain as cash proceeds minus adjusted basis. The adjusted basis the tracker carries includes your share of the partnership’s liabilities (Schedule K-1 Item K, through Lines 3 and 9 of the IRS Partner’s Basis Worksheet), but the cash proceeds did not include the same share. When you sell partnership units the buyer takes over your share of the partnership’s liabilities, and that share is part of your amount realized (IRC §752(d); Treas. Reg. §1.1001-2(a)(1) and (a)(4)(v): “The liabilities from which a transferor is discharged as a result of the sale or disposition of a partnership interest include the transferor’s share of the liabilities of the partnership”; Reg. §1.752-1(h)). Every estimate for a position with a recorded Item K share therefore understated the gain, on full and partial sales alike, by the share allocable to the units sold.

What changed: the amount realized is now cash plus the Item K liability share of the lot at your last recorded K-1 year-end, allocated to the units sold in proportion to units (the same allocation the basis uses). The Sale Estimate waterfall, its PDF and text exports and the “sold today” figure show the liability share as its own line, and state that basis is as of your last recorded K-1 year-end. The engine reproduces the worked examples in Treas. Reg. §1.1001-2(c) (Example 3) and Reg. §1.751-1(g) (Example 1) exactly. The PTP passive-loss guide and the distributions guide now describe the amount realized the same way. Positions with no Item K share recorded are unchanged.

Who is affected: anyone who used a Sale Estimate or the sold-today figure for a position whose K-1s carry Item K liabilities. The gain shown was too low by that share; because the partial-sale suspended-loss offset (corrected the same day) is capped at the gain, that figure could be too low as well. Estimates are computed when you open them, so rerun them. The §751 ordinary-income estimate was not affected; it comes from a depreciation proxy and, at sale, from the partnership’s sales schedule.

§751 recapture guide: "released losses first offset §751 ordinary income, then capital gain" had no source

Fix shipped September 29, 2026 · Logged September 28, 2026

The §751 recapture guide (FAQ and the suspended-losses section) and, until September 28, the When-to-Sell guide said that suspended passive losses released at sale “first offset §751 ordinary income, then any remaining losses offset capital gain.” No IRS rule says that. Under Temp. Reg. §1.469-1T(f)(2)(ii) a disallowed loss is disallowed ratably across the activity’s deductions, and under Reg. §1.469-1(f)(4) it is treated as a deduction from the activity in the following year, so an allowed prior-year loss is reported on the form its items came from (a Box 1 loss on Schedule E as a passive loss from the PTP) while the §751 amount stays on Form 4797 and the capital gain on Form 8949 (Instructions for Form 8582 (2025), Special Instructions for PTPs). Section 469 does not change the character of the gain (Temp. Reg. §1.469-1T(d)(1)).

Both passages now describe where the allowed loss is reported and drop the ordering. The K-1 Basis Tracker prices the loss benefit at the ordinary marginal rate, which matches an ordinary Box 1 loss deducted on Schedule E; that pricing is an estimate convention and is labelled as such.

PTP passive-loss guide and the Sale Estimate: a partial sale does use suspended losses, up to the gain on the units sold

Fix shipped September 29, 2026 · Logged September 28, 2026

The PTP passive-loss guide said that selling part of an MLP position leaves the suspended losses untouched (“partial sales don’t count”), and the K-1 Basis Tracker’s Sale Estimate applied $0 of suspended losses to every partial sale. That is wrong. Under the Instructions for Form 8582 (2025), gain from disposing of less than an entire interest is part of that activity’s net income for the year (“Disposition of Less Than an Entire Interest”), and for a publicly traded partnership you combine current-year income, gains and losses with prior-year unallowed losses; on an overall loss, the losses are allowed to the extent of the income and the excess carries forward (“Special Instructions for PTPs”). The regulation behind it is Temp. Reg. §1.469-2T(c)(2)(i)(A): gain on disposing of an interest in a passive activity held through a partnership is passive activity gross income of that activity. So on a partial sale, the gain on the units sold, both the §751 ordinary portion and the capital gain, is income of that PTP for the year, and the PTP’s losses, current-year and prior-year unallowed, are allowed to the extent of that income. What a partial sale still does not do is free the losses against wages or other income; that requires disposing of the entire interest in the PTP in a fully taxable transaction to an unrelated party (IRC §469(g)(1)(A); §469(k)(3)).

What changed: the guide’s partial-sale section, FAQ and Form 8582 section were rewritten with the rule and a worked figure ($3,000 suspended; partial-sale gain of $1,500; $1,500 offsets, $1,500 carries forward). The same sentence was corrected on the §751 recapture guide’s FAQ, the TurboTax K-1 guide and the When-to-Sell guide. The Sale Estimate (both the basic and the bracket-aware version) and the pre-sale check now apply suspended losses to a partial sale up to the gain on the units sold (the sale-only floor of what the return allows) and show the balance carried forward. Full-disposition results are unchanged. Sale estimates are computed when you open them and are not stored, so nothing needs to be recomputed.

Who is affected: anyone who used the guide or a partial-sale estimate to decide between selling part or all of a position: the estimate overstated the tax on a partial sale by the suspended losses it should have applied, at the marginal rate. The Sale Estimate still cannot see the year-of-sale K-1, so its partial-sale figure counts only the gain; current-year items from the same PTP enter the same netting on the return. Reported by a reader on September 28, 2026.

Irrevocable-trust guide: the §751 calculator's footnote gave the 2024 trust-bracket threshold

Fix shipped September 22, 2026 · Logged September 22, 2026

The footnote under the §751 year-of-sale calculator on the irrevocable-trust guide said trust rates compress at $15,200. That is the tax year 2024 figure; for tax year 2025 the 37% trust bracket starts at $15,650 (Rev. Proc. 2024-40, §3.01). The calculator itself already computed trust tax from the site’s tax-constants module, so its results were not affected. The footnote now reads the threshold from that module and states the tax year.

MLP-in-an-IRA guide: the trust-bracket threshold and the single-filer brackets were 2024 figures

Fix shipped September 22, 2026 · Logged September 22, 2026

The guide to MLPs in an IRA said the 37% trust rate on UBTI starts at $15,200 of income, and its bracket table, captioned as 2025, carried that figure in the trust column and tax year 2024 amounts in the single-filer column from the 24% row down (the 24% row also showed the 22% bracket). For tax year 2025 the trust 37% bracket starts at $15,650 and the single-filer 37% bracket at $626,350 (Rev. Proc. 2024-40, §3.01).

The opener, the table, the worked paragraph beneath it, the FAQ answer on selling inside an IRA and the key-takeaways line now carry the 2025 amounts, matching the site’s tax-constants module. No calculator used the stale figures: the K-1 Basis Tracker and the Portfolio Simulator read their brackets from that module, which already held the 2025 values.

API and MCP tools: tax on sale understated when §751 recapture exceeds total gain

Fix shipped September 19, 2026 · Logged September 19, 2026

The API capped §751(a) ordinary income at the total gain on a sale. Under Reg. 1.751-1(a)(2), ordinary income is figured on the §751 property by itself and the remainder is capital gain or loss under §741, so ordinary income can exceed the total gain. When cumulative §751 recapture was greater than the gain, the sell-now tax, the deferred tax eliminated at death, the break-even sell price, and the estate and ETF comparison figures built on them were too low. In all other cases results were unchanged.

The website simulator has used the correct treatment since July 2, 2026. If you used these tools for a position where recapture is large relative to the gain, please run it again.

The §751 recapture estimate included Box 13 amounts; basis was never affected

Fix shipped September 17, 2026 · Logged September 17, 2026

The K-1 Basis Tracker estimates §751 ordinary income at sale from a running total of depreciation-type items on your K-1s, shown as a 100% / 80% / 60% range. Every §751 estimate produced before September 17, 2026 included Box 13 (other deductions) amounts in that running total.

On the K-1s we checked (Energy Transfer, tax years 2022 and 2024), Box 13 reported cash contributions (code A), investment interest expense (code H) and excess business interest expense (code K). None of these is depreciation, so including Box 13 overstated the estimate by those amounts. Code letters can differ by tax year. The estimate no longer includes Box 13. Handling each Box 13 code separately is planned. Basis figures were never affected.

What was affected: the §751 range on the Sale Estimate and its PDF and text exports, the cumulative §751 exposure card, the premium bracket-aware sale estimate and Tax Impact Panel, and the LP disposition tool’s §751 input. Your basis figures were never affected: the basis worksheet does not read this estimate.

The estimate now includes only §179 deductions (Box 12) and Box 1 losses. It remains an estimate: when you sell, your sponsor’s sales schedule states the actual §751 amount — use it, not this estimate.

This corrects itself on your next visit. Every stored worksheet is stamped with the engine version that computed it; on load, records computed under the earlier definition are recomputed from your stored K-1 inputs and the §751 figures update. Nothing you entered changes. If you exported a sale estimate before September 17, 2026, regenerate it afterward.

Box 20 code V (unrelated business taxable income) could be read into Box 11 by the K-1 PDF import

Fix shipped September 17, 2026 · Logged September 17, 2026

The K-1 Basis Tracker’s PDF import could place the Box 20 code V amount (unrelated business taxable income, an information-only code) into Box 11 (other income). Box 11 feeds the basis worksheet’s other-income increase, so a misplaced amount changed the stored inputs for that year and every later year’s beginning basis. The effect depends on the sign of the amount that was misplaced:

• Positive 20V amount → ending basis OVERSTATED by that amount. The worksheet adds positive other income to basis; the overstatement carries into every later year’s beginning basis. At sale, an overstated basis understates taxable gain. In the premium bracket-aware estimates (Tax Impact Panel, bracket-mode Sale Estimate) the same amount was also counted as ordinary income, overstating estimated tax for that year.
• Negative 20V amount → ending basis UNDERSTATED by that amount, to the extent basis was available. The worksheet treats negative other income as a loss subject to the basis limitation: it reduces basis up to the basis available, and any excess is carried forward as a suspended loss that would release in a later year. At sale, an understated basis overstates taxable gain. In the premium bracket-aware estimates the amount reduced estimated ordinary income, understating estimated tax.

Neither case affects the tool’s §751 recapture estimate or its passive (§469(k)) tracking, which do not read Box 11. Any K-1 imported from a PDF before September 17, 2026 may be affected.

Who is affected: any user who imported a K-1 PDF showing a Box 20 code V amount and accepted the extraction without correcting Box 11 on the review screen or in Edit K-1. The misplaced amount is visible: it appears as “Box 11 — Other income” on the extraction review screen, in the position’s year detail, and in the basis-report PDF and text exports. A user whose K-1 has no Box 20 code V amount, or who corrected Box 11 before calculating, is not affected.

What you need to do — this does NOT correct itself. The tool cannot tell a misplaced 20V amount from a real Box 11 entry after the fact. The fix is a manual edit: for each stored year that came from a PDF import, open Edit K-1 (detailed mode), compare Box 11 with the Box 11 line printed on that year’s K-1, correct it, and save; later years recompute from the corrected year automatically. Do not rely on re-uploading the PDF to fix a year you have already edited: re-uploading replaces ALL stored inputs for that year, including any values you corrected by hand (for example Box 13), with no prompt. Users who hand-edited a year should use the manual edit. Re-uploading a year that has no hand edits is an acceptable alternative: the import now reports Box 20 code V in its own place and clears a Box 11 amount that merely equals it, with a warning. If you exported a CPA report or sale estimate before correcting, regenerate it afterward.

The import now records Box 20 code V as information only (it is never used in the basis worksheet) and shows it on the review screen, in Edit K-1, and in the year detail. Box 20 codes other than A, N and V are still not captured.

Editing a K-1 year on a position with more than one lot shrank that year's totals

Fix shipped September 17, 2026 · Logged September 17, 2026

On a position with two or more purchase lots, the K-1 Basis Tracker stores each year’s K-1 as one share per lot. Opening Edit K-1 for a stored year from a year row or from the basis timeline filled the form with the selected lot’s share instead of the whole position’s totals. Pressing Calculate then treated that share as the whole K-1 and split it across the lots again. Every box in that year shrank to the selected lot’s fraction of the position (for two equal lots, half), whether or not anything in the form was changed, and every later year recomputed from the shrunken year. A position with a single lot was not affected, and neither was entering a year for the first time or importing it from a PDF, CSV or spreadsheet.

Affected window: since multi-lot distributions were introduced, until September 17, 2026.

Who is affected: anyone who, on a position with more than one lot, opened Edit K-1 for a year that was already stored and pressed Calculate. Each such edit reduced that year’s totals; repeated edits compounded. Ending basis for that lot set is misstated from that year forward, and any sale estimate or report drawn from it is misstated with it.

What you need to do — this does NOT correct itself, and the tool cannot detect it. The tracker does not store the totals you entered, only the per-lot shares, so a shrunken year looks the same as a small K-1. For every position with more than one lot, open Edit K-1 for each stored year. The form now holds the position totals and says so: “K-1 totals for your whole [ticker] position (N lots). Lot shares are re-allocated when you calculate.” Compare each box with the K-1 for that year, re-enter any box that differs, and save; later years recompute automatically. Re-uploading the K-1 PDF also restores a year, but it replaces every stored input for that year, including values you corrected by hand. If you exported a CPA report or sale estimate from an affected position, regenerate it afterward.

Box 18B and Box 18C were not accepted as inputs in the K-1 Basis Tracker

Fix shipped September 9, 2026 · Logged September 9, 2026

From May 11, 2026 until September 9, 2026, the K-1 Basis Tracker’s computation engine supported Box 18B (other tax-exempt income, worksheet Line 4m) and Box 18C (nondeductible expenses, worksheet Line 12), but no entry path — the Edit K-1 form, the PDF upload, or the CSV import — could populate either box. Every stored year therefore computed with both at zero. Before May 11, 2026 the engine had no Line 12 step at all, so the Box 18C omission extends back to the tool’s launch.

Effect per year, per K-1:

• Box 18C omitted → ending basis OVERSTATED by the Box 18C amount (IRC §705(a)(2)(B) reduces basis for nondeductible, non-capital expenditures). The overstatement carries into every later year’s beginning basis. At sale, an overstated basis understates taxable gain. Nearly every MLP K-1 reports a small Box 18C amount, typically single or low double digits per year.
• Box 18B omitted → ending basis UNDERSTATED by the Box 18B amount (IRC §705(a)(1)(B) increases basis for tax-exempt income). Box 18B is rare on midstream MLP K-1s.

Who is affected: every user with stored K-1 years whose K-1s show a nonzero Box 18C (most) or Box 18B (few).

What you need to do — this does NOT correct itself. The tool cannot recover a number it never stored. For each stored year, open Edit K-1 (detailed mode), enter Box 18B and Box 18C from that year’s K-1, and save; later years recompute from the corrected year automatically. Re-uploading the K-1 PDF also captures both boxes now. If you exported a CPA report or sale estimate before entering these values, regenerate it afterward.

Box 20N (business interest expense) in the K-1 Basis Tracker’s basis worksheet

Fix shipped September 4, 2026 · Logged September 5, 2026

The K-1 Basis Tracker mishandled Box 20N (business interest expense) in two distinct windows:

• Before May 11, 2026: the engine added Box 20N back on worksheet Line 4n but had no Line 15q deduction at all. In years with positive Box 1+2+3 income, ending basis was overstated by the added-back amount. An overstated basis understates taxable gain at sale — if you sold in this window and your K-1s carried Box 20N, your reported gain may have been too low; review with your CPA.
• May 11 – September 4, 2026: the rebuilt engine deducted the full Box 20N on Line 15q while capping the Line 4n addback at positive Box 1+2+3 income. In any year where Box 20N exceeded that positive income — loss years, which are typical for midstream MLPs — ending basis was understated by the difference, up to the full Box 20N per year. An understated basis overstates taxable gain at sale and can suspend losses too early. Years where Box 20N ≤ positive Box 1+2+3 were unaffected in this window (the addback and deduction cancelled).

The engine now carries the same capped amount on both lines: Box 20N on its own does not change ending basis. This matches the IRS treatment — per the TY2025 Partner’s Instructions, Code N: “Deductible BIE is reported elsewhere on Schedule K-1 and the total amount is reported here for information only and was already included as a deduction on another line of your Schedule K-1.” (The IRS worksheet enters the full 20N on Line 15q while excluding BIE from the loss lines 15a–15c; the tool computes the identical ending basis by carrying the Line 4n capped amount on both lines.) Business interest expense reduces basis as an undeducted item only when the partnership allocates it as excess business interest expense, Box 13 code K. See the corrected walkthrough in the K-1 Basis Worksheet Explained.

Who is affected: any user whose K-1 entries carry a nonzero Box 20N — overstated basis before May 11, 2026 (income years); understated basis from May 11 until the fix shipped (years where 20N exceeded positive Box 1+2+3, checked per year and per lot share).

This corrects itself on your next visit. Every stored worksheet is stamped with the engine version that computed it; on load, records computed under superseded math are recomputed from your stored K-1 entries — no re-entry needed. If you exported a CPA report or sale estimate from an affected year before September 4, 2026, regenerate it after your next sign-in.