Does a merger of PTP's free up unused loss

[NECPA in NEBRASKA]

Two PTP's merged, the original filed a final K-1 and there is a 1099B for proceeds received by my client, a limited partner. There are $5,900 of prior year loss carryforward from the original PTP. I keep reading and everything that I see says that these can only be used when the entire interest in that PTP is disposed of to an unrelated person in a fully taxable transaction. Yes, they are paying tax on the proceeds they received on Sch. D, but I don't know if this is considered being totally disposed of. If not, how do I get these losses transferred to the new PTP? Do I just move them over on the worksheet?

I just hate these things. They are such an PITA and slow me down. I have a bunch of them and I could just cry. I need some easy returns to pop up in the drawer.

Thanks to anyone that understands these better than me.

[jklcpa]

Try sec 708(b )(2) and Reg sec 1.708(c) under mergers and consolidations.  Link is safe, goes to Cornell Edu law online library.

(c) Merger or consolidation

(1) General rule. If two or more partnerships merge or consolidate into one partnership, the resulting partnership shall be considered a continuation of the merging or consolidating partnership the members of which own an interest of more than 50 percent in the capital and profits of the resulting partnership. If the resulting partnership can, under the preceding sentence, be considered a continuation of more than one of the merging or consolidating partnerships, it shall, unless the Commissioner permits otherwise, be considered the continuation solely of that partnership which is credited with the contribution of assets having the greatest fair market value (net of liabilities) to the resulting partnership. Any other merging or consolidating partnerships shall be considered as terminated. If the members of none of the merging or consolidating partnerships have an interest of more than 50 percent in the capital and profits of the resulting partnership, all of the merged or consolidated partnerships are terminated, and a new partnership results.

[NECPA in NEBRASKA]

Thanks, Judy! I was pretty sure that I could not use the losses this year. I will read up online on this merger and see how these PTPs handled it. All they have ever done is spin off losses. 

[jklcpa]

Well, maybe it will turn out that the one your client owned has been terminated, and that would allow the losses to be used. 

[SFA]

We had one of these as well. They really are bummers. A lot of entries, all for a lot of nothing! Argh. What broker encourages his clients to buy these dumb things! Ours was a merger with a foreign PTP.

[NECPA in NEBRASKA]

Judy, Thanks so much for that link. I should have used better search terms on Google or something. I relied on the pubs and instructions too much. After reading a bunch of garbage, I did find that my client's partnership ended up being terminated. It would have been nice, it they would have just put them in their packets or easily found on their webpage.

I would be so lost without this website!