How do I file taxes for Publicly Traded Partnership stocks like UCO? Getting confused by Schedule Ks

Thanks for explaining! I'm in a similar situation with KYN. So just to make sure I understand - if I originally bought at $40 per unit, then over time had $15 of K-1 income I paid taxes on, and received $8 in distributions, my adjusted basis would be $47 ($40 + $15 - $8)? Then when I sell, I use that $47 as my cost basis?

Your understanding is exactly right! Your adjusted basis would be $47 in that example. You start with your original purchase price ($40), add the income reported on K-1s that you've already paid taxes on ($15), and subtract any distributions received ($8), giving you an adjusted basis of $47. When you eventually sell your PTP units, you'd use this $47 adjusted basis to calculate your gain or loss. This adjustment process is specifically designed to prevent the double taxation issue that concerned the original poster. It can be a bit more paperwork, but it ensures you're not paying taxes twice on the same income.

Does it really work with the more complicated PTPs? I have some MLP investments that produce ridiculously complex K-1s with state filings in like 20+ states I don't even live in. Does this handle that level of complexity?

I'm skeptical about these tax services. How is this different from just having my accountant handle it? They usually charge me like $75 extra per K-1 and claim these are "complex." Is this service actually going to save me money or just create more confusion?

It absolutely works with the more complicated PTPs and MLPs. The system is designed specifically for handling complex K-1s including those with multi-state filings. It automatically extracts all the state-specific information and tells you exactly which state forms you need to file - even for those states you don't live in. The difference from an accountant is primarily cost and convenience. While accountants typically charge per K-1 (as you mentioned, around $75 each), this service handles multiple K-1s for a flat rate. Plus, you get instant analysis rather than waiting for your accountant to get to it during busy season. Many users actually share the reports with their accountants to save time and reduce their billable hours.

How does this actually work though? I thought the IRS phone lines were just impossible to get through regardless. Are they somehow jumping the line or what? I've literally spent full days on hold before.

This sounds too good to be true. I've tried calling the IRS about my PTP issues several times and just gave up after hours on hold. Is this service just going to charge me and then I'll still end up waiting forever? Not sure I buy that they have some magic way to get through.

It works by using an automated system that continuously calls the IRS using optimal timing strategies and navigates through all the phone prompts for you. When a line opens up, you get a call back and are already through the queue - you just need to pick up and you're talking to an IRS agent. No waiting on hold at all. They don't have special access to the IRS or anything improper - they've just perfected the calling strategy after thousands of calls and know exactly when and how to call for minimum wait times. The service actually tells you your estimated wait time upfront, and you only pay if they get you through within that timeframe. I spent literally 6+ hours trying on my own before using this, so getting through in 20 minutes felt like magic.

TurboTax does handle PTPs but not very elegantly. I've found TaxAct actually has a better interview process for PTPs specifically. It walks you through the basis adjustments more clearly and doesn't try to double-count. I switched last year after having the same issue with TurboTax and was much happier with how TaxAct handled my UCO and AMLP investments.

Thanks for the TaxAct suggestion. I've been using TurboTax for years and wasn't aware TaxAct might handle these situations better. I'll definitely look into switching for this tax season. I'm getting pretty frustrated with how TurboTax keeps trying to double-count my PTP income. Having to manually fix everything in forms view defeats the whole purpose of using tax software in the first place. Hopefully TaxAct's interview process for the basis adjustments will save me some headaches.

Your accountant is mistaken. UCO is a domestic PTP traded on US exchanges. You only need to file Form 8938 or FBAR for financial assets held outside the US. The fact that UCO might invest in commodities or futures contracts with international exposure doesn't make it a foreign financial asset for FBAR or 8938 purposes. This is a common misconception. You only need to report on those forms if YOU directly hold the foreign assets or accounts. Since you're just holding the PTP units which are domestic securities, there's no FBAR or 8938 requirement here.