How to Handle PTP 1099 and K-1 Forms for Publicly Traded Partnership Shares

You definitely need to report the K-1, but you're right to be concerned about double counting. The 1099 and K-1 are reporting different aspects of your investment, even though they might appear to overlap. The 1099 from your brokerage is typically reporting the cash distributions you received from the PTP throughout the year. The K-1, however, reports your share of the partnership's income, deductions, credits, etc., which is often different from the actual cash distributions. The K-1 income is what you're taxed on, not necessarily the distributions. When you enter the K-1 in TurboTax, the software should guide you through the process correctly. The distributions reported on the K-1 (usually in Box 19) reduce your basis in the partnership but aren't typically taxed again if they're already included in other income boxes on the K-1.

After struggling with multiple K-1s and partnership distributions last year, I finally found a solution that saved me hours of headache with this exact issue. I used https://taxr.ai to analyze all my tax documents and it automatically identified this potential double-counting problem with my PTP investments. The service flagged exactly where my broker's 1099 and the partnership K-1 had overlapping information and showed me how to correctly input everything into my tax software. It was incredible because it basically gave me a step-by-step guide specific to my situation. I was so close to paying tax twice on the same money!

Just wanted to follow up - I was skeptical but decided to try https://taxr.ai with my PTP K-1 situation and wow! It actually showed me exactly where my broker's 1099 was overlapping with my K-1 and saved me from double reporting about $3,700 in distributions. It even explained that the cash distributions on my 1099 weren't fully taxable because part was return of capital, and showed me where to adjust my basis instead. Super helpful and way easier than the hours I spent last year trying to figure it out on my own. Definitely using this for all my investments next year!

If you're having issues getting a straight answer about your PTP and K-1 situation, you might want to call the IRS directly. I know that sounds terrible (and it usually is), but I used https://claimyr.com to get through to an actual IRS agent after getting conflicting advice online. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was on hold forever trying to get clarification on a similar PTP issue last month, then I found this service that basically waits on hold for you and calls when an agent picks up. The agent I spoke with confirmed exactly how to handle my PTP investments without double-reporting the income.

Ok I need to eat crow here. After posting my skeptical comment, I decided to try https://claimyr.com out of desperation because my accountant was quoting me $350 extra just to handle my two PTP investments. The service actually worked! After about 45 minutes (during which I just went about my day), I got the call and spoke with an IRS agent who was surprisingly helpful. She walked me through the specific box on my K-1 (Box 19A) that showed my distributions and explained how that relates to what my broker reported. Saved me from double-reporting AND from paying my accountant's extra fee. Sometimes I hate being wrong, but in this case I'm happy I was!

I've owned Enterprise Products Partners for years and had this same issue. The key thing to understand is that the K-1 is breaking down the TAX CHARACTER of your distributions, while the 1099 is just reporting that you received money. Most PTP distributions are largely return of capital (not immediately taxable) with smaller portions being ordinary income, capital gains, etc. You definitely need to enter the full K-1, but the software should handle it correctly. Pro tip: Keep track of your adjusted basis! Those return of capital distributions reduce your basis and will affect your taxes when you eventually sell.

Has anyone else noticed that TurboTax doesn't handle these PTPs well? I tried entering my Enterprise Products Partners K-1 last year and it kept giving me errors about passive activity limitations even though the K-1 clearly showed it wasn't subject to those rules.

This is such a common confusion with PTPs! I went through the exact same thing with my Kinder Morgan units. Here's what I learned after dealing with this mess: The 1099 from your broker is just showing cash you received - it's like a receipt. The K-1 is what actually matters for taxes because it breaks down the tax character of those distributions. Most of what you received was probably return of capital (reducing your basis) rather than taxable income. When you enter the K-1 in TurboTax, make sure you're in the "Rental Real Estate, Royalties, Partnerships, S Corporations, Trusts, etc." section and specifically select "Partnership (Form K-1)" not just regular partnership. The software should then ask if it's a publicly traded partnership, which changes how it handles the passive activity rules. Don't enter the 1099 distribution amounts as additional dividend income - that would definitely double-count. The K-1 should have all the tax info you need. Just make sure to keep good records of your basis adjustments for when you eventually sell!

This is exactly the kind of situation that trips up so many PTP investors! I've been dealing with multiple energy partnerships for years and can confirm what others have said - the K-1 is your primary tax document, not the 1099. Here's what's likely happening: Your broker's 1099 is showing the total cash distributions you received throughout the year. But the K-1 breaks down the actual tax character of those distributions - typically a mix of return of capital (non-taxable but reduces your basis), ordinary income, and maybe some capital gains. In TurboTax, when you get to the K-1 section, make sure you select "Publicly Traded Partnership" when it asks about the partnership type. This is crucial because PTPs have different passive activity rules than regular partnerships. You should NOT enter the distribution amounts from your 1099 as additional dividend income - that would absolutely double-count your income. One thing I always tell people: keep a spreadsheet tracking your basis adjustments from the return of capital distributions. You'll need this when you sell, and it can save you from overpaying taxes down the road. The partnership should provide basis tracking on their website, but it's good to have your own records too.

I actually just went through this exact situation with my Magellan Midstream units! The confusion is totally understandable because it really does look like you're getting duplicate reporting. Here's what I learned after consulting with a CPA who specializes in energy investments: The 1099 from your brokerage is essentially just a cash flow statement - it shows money that moved into your account. But for tax purposes, what matters is the K-1, which tells you the actual tax character of those distributions. Most PTP distributions are largely "return of capital" which isn't immediately taxable - instead it reduces your cost basis in the investment. The K-1 will show this in Box 19A. Only the portions reported in other boxes (like Box 1 for ordinary income) are immediately taxable. When you enter your K-1 in TurboTax, make sure you select "Publicly Traded Partnership" when prompted - this is crucial because PTPs get different treatment than regular partnerships. The software should automatically handle the passive activity rules correctly for PTPs. Whatever you do, don't enter the distribution amounts from your 1099 as additional dividend income on top of the K-1 data - that would definitely double-count your income and result in overpaying taxes. Pro tip: Start a simple spreadsheet now to track your basis adjustments from the return of capital distributions. You'll thank yourself later when you sell!