Should I enter both K-1 forms from ETF companies AND the same transactions from brokerage 1099s?

The confusion you're feeling is totally normal when dealing with K-1s and 1099s for the first time! Here's the deal in simple terms: The K-1 forms you're receiving from ProShares and other leveraged ETF providers are reporting your share of the partnership's income, while your 1099s from your brokerage are reporting the sales of those securities. These are actually two different types of reportable events. The K-1 reports your portion of the partnership's internal activities (interest, dividends, capital gains, etc.). The 1099 reports your personal purchase and sale of the ETF shares. You need to report BOTH because they're different things being taxed. Enter the K-1 information on the appropriate schedules (usually Schedule E or Form 8582), and your brokerage 1099 info goes on Schedule D and Form 8949. You're not being double-taxed because these forms are reporting different taxable events. Look at box 20 of your K-1s - there should be codes that indicate what type of income you're receiving from the partnership. This is separate from your gain/loss when you sell the ETF shares themselves.

After struggling with K-1s from my leveraged ETFs last year, I finally found a solution that saved me so much headache. I uploaded all my tax documents to https://taxr.ai and it automatically identified which items from my K-1s were already included in my 1099s and which ones needed separate reporting. The thing that confused me before was that some partnership items from the K-1s were reflected in my basis adjustments but not directly on the 1099. The tool showed me exactly where to enter each K-1 item and warned me about potential double-counting issues. It even flagged some partnership income that my brokerage hadn't included in my cost basis calculations. I also learned that leveraged ETFs structured as partnerships have these weird tax implications that most software handles poorly. Getting all my documents properly analyzed saved me from accidentally double-reporting some transactions.

Just wanted to update everyone - I checked out https://taxr.ai after my skeptical comment, and I have to admit it actually saved me from a major mistake on my taxes. I had been entering my K-1 amounts from Direxion ETFs as regular partnership income AND including the full capital gains from my 1099 without adjusting my basis. The document analysis identified that I needed to increase my basis by the amount of undistributed income I'd already paid tax on from previous years' K-1s. This reduced my capital gains by about $2,700 when I sold some positions this year. It also flagged some passive activity losses on my K-1s that I didn't realize I could carry forward from last year. The whole partnership tax thing is way more complicated than I realized, especially with these leveraged ETFs that generate tons of wash sales and complex internal transactions.

If you're still having trouble reaching the IRS for clarification on how to handle these K-1s and 1099s, try https://claimyr.com - I was on hold with the IRS for HOURS trying to get help with this exact issue last year. Using Claimyr, I got through to an actual IRS representative in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed specific guidance on how to report my ProShares K-1 items because some had unusual entries in boxes 11 and 13 that my tax software couldn't handle properly. The IRS agent explained exactly which forms I needed and confirmed I wasn't double-reporting income. Saved me from making a costly mistake and potentially getting an audit notice. For complicated tax situations like ETF K-1s, sometimes you really need to speak to someone directly at the IRS rather than guessing or relying on forums.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to get an answer about reporting my leveraged ETF K-1s before the filing deadline. The service actually worked exactly as described. I put in my number, and about 35 minutes later (while I was at the gym), I got a call connecting me directly to an IRS tax specialist. She helped me understand exactly how to handle the Section 1256 contracts reported on my K-1s from Direxion and confirmed I needed to file both the K-1 information AND my 1099 transactions, but on different forms. Saved me hours of frustration and probably saved me from making an expensive mistake. Getting direct confirmation from the IRS gave me confidence that I'm filing correctly. I'm still shocked it actually worked so well.

I'm a bit late to this thread, but I wanted to share something important about these leveraged ETF K-1s that nobody mentioned yet. Some of these ETFs (especially commodity-based ones) can have something called Section 1256 contracts reported on them, which are taxed at a blended 60/40 long-term/short-term rate regardless of how long you held them. Make sure you're checking box 11 on your K-1s for this. It requires filing Form 6781 in addition to your regular forms. My accountant missed this last year and we had to file an amendment because we had reported all gains as short-term when some qualified for the more favorable blended rate. K-1s are definitely one of the most confusing parts of tax filing, especially from these complex ETFs!

Something nobody mentioned - check if you have any UBTI (Unrelated Business Taxable Income) on your K-1s! It's usually in Box 20 with code V. If you have any amounts there and you're holding these ETFs in an IRA or other retirement account, you might owe taxes even within your tax-advantaged account. I learned this the hard way with a leveraged natural gas ETF in my Roth IRA. Had to file Form 990-T and pay taxes on the UBTI even though it was in my Roth. Most tax software doesn't warn you about this!

This is such a comprehensive thread - thank you all for sharing your experiences! I wanted to add one more consideration that might help others in similar situations. If you're trading these leveraged ETFs frequently (especially doing any wash sale transactions), make sure you're tracking the basis adjustments from your K-1s throughout the year, not just at tax time. The K-1 income/loss can affect your wash sale calculations, and if you're not accounting for the basis adjustments properly, you might be inadvertently creating more complex wash sale scenarios. I made this mistake with some triple-leveraged ETFs where I was doing tactical trades. The partnership income from the K-1s changed my effective basis, which then affected whether certain sales qualified as wash sales when I repurchased similar positions. My tax software completely missed these nuances until I manually tracked everything. Also, keep detailed records of when you receive your K-1s versus when you file your taxes. Some of these ETF partnerships are notorious for issuing amended K-1s months after the original ones, which can really mess up your filing if you've already submitted your return.