Ultra Tax, ATX, others & complex partnership transactions, by SaraEA from another topic

[jklcpa]

In another topic SaraEA said:  (for reference, the original topic was "Partner K-1 box 16" )

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UltraTax also does not have an entry for Box 16 of the K1 either but supplies a link to the 1116, another thing that makes me think it's required.

Lion notes that sales of these investments require hand calculations of adjusted basis and ordinary income.  The broker statements where these are held list the sale under "basis not reported" but usually give some number, which is wrong.  Also note that the rules are different if you sell the entire PTP holding as opposed to selling some of it.  If you sell it all, you just follow the formula and adjust for ordinary income and calculate gain/loss.  If you only sell some of it, it is not treated like sales of stock where you can do FIFO.  Instead the entire investment is treated as one unit, even if different blocks of shares were purchased at different times.  Then you have to do something like average cost basis (like with mutual funds) then calculate gain/loss and take the ordinary income portion out of there (and yes, even if you have a loss on the sale you still have ordinary income, which ends up increasing your basis and your loss).

Last week I did one of these partial sales out by hand so I would know what the result was supposed to be.  I fully expected to spend the next hour or two coaxing the software into putting the right numbers in the right places.  Well, UltraTax just did it!  No coaxing required.  Add this to our list of second thoughts about quitting UT and staying only with ATX.  Maybe I'll put this return and some other doozies into ATX and see what it can and can't do.  We'll definitely keep ATX for payroll and 1099s--can't beat the ease of use or the price.  For tax, though, we really need a strong program.  We would love to save the $15-18k price of UT, and geez I did the partial sale out by hand anyway, but ......

And thanks Lion for the motivational comment:  "So, let them pay you for the tax reporting consequences of their decisions."  My client with five K1s from PTPs and the partial sale is going to pay $500 extra.

 

 

Edited September 9, 2016 by jklcpa
added to title only, for clarity

[jklcpa]

Lion then posted:

 

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Just want to go on record as using ProSystem fx for years and paying a small fraction of what Sara pays for UT.  When I first encountered a sale of part of a client's units in a PTP, I worked out in very round numbers by hand/Excel how I expected the numbers to flow on the return, using the schedule the PTP provided and not worrying about what the broker reported as I did my own calculations.  Thankfully, Pro fx did what I expected.  Having sales no more frequent than every other year, I continued to refer to my notes to check the flow in Pro fx.  Now, as more clients are selling as well as buying more PTPs, I can proofread the returns pretty quickly and trust Pro fx more and more.