Every substantive error published on this site — a wrong number, a
misstated rule, a citation that does not support its claim — is
recorded here when it is fixed, newest first, effective August 15, 2026.
Each entry states what was wrong, what it was corrected to, and the date
the fix shipped. Corrections are shipped and logged, not quietly edited;
typos and formatting fixes that do not change meaning are not logged.
Sale Estimate: the 3.8% tax on a sale of an entire position was too high when the sale released suspended losses
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On a sale of an entire PTP interest, the K-1 Basis Tracker’s Sale Estimate (basic and bracket-aware) computed the 3.8% net investment income tax on the gain from the sale without reducing net investment income for the losses the sale released. From October 1, 2026 the result, the PDF and the text export carried a note saying so. Losses allowed because of a disposition of the entire interest are taken into account for net investment income in the same manner as for taxable income, in net gain or as properly allocable deductions (Reg. §1.1411-4(g)(9)). Net gain cannot be less than zero (Reg. §1.1411-4(d)(2)), and deductions in excess of net investment income do not carry to another year for this tax, except as chapter 1 allows (Reg. §1.1411-4(f)(1)(ii)).
What changed: on a sale of an entire interest the estimate now reduces net investment income for the losses the sale releases. The basic estimate computes the 3.8% line on the gain less those losses, not below zero. It does not have your other investment income, so losses larger than the gain reduce nothing further there. The bracket-aware estimate also takes the losses off the other net investment income it holds for the same year. Both assume the interest was a passive activity for you in every year you held it, and both count the whole §751 amount as net investment income, which is a convention of the estimate. The note on the result, the PDF and the text export now says this for a sale of an entire interest. For a sale of part of a position the 3.8% figure and its note are not changed: the estimate still computes that tax without reducing it for the losses allowed. The K-1 losses guide cited Reg. §1.1411-4(g)(8), which covers former passive activities, in its answer on the 3.8% tax; it now cites paragraph (g)(9).
Who is affected: anyone who ran a Sale Estimate for a sale of an entire position where the sale released suspended losses or a sale-year K-1 loss and the 3.8% tax was applied: in the basic estimate, with the NIIT box ticked; in the bracket-aware estimate, with income above the NIIT threshold. The 3.8% figure and the net estimated tax shown before were too high, by up to 3.8% of the losses released. The corrected figures are lower, or the same where the sale had no gain or the 3.8% tax was limited by income over the threshold both before and after. Sales of part of a position, sales that released no loss, and estimates where the 3.8% tax did not apply are not changed.
Sale Estimate: partial-sale losses were capped at the net gain when the capital part was a loss, plus display and export fixes
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On a sale of part of a PTP interest, the K-1 Basis Tracker’s Sale Estimate (basic and bracket-aware) treated the sale as one net gain and allowed the PTP’s losses only up to that net figure. Where the §751 ordinary amount was larger than the total gain, so that the capital part was a loss, the capital loss was set against the §751 amount before any K-1 loss was allowed. When the total gain was zero or negative the result said “Partial sale with no gain” and allowed no loss. The §751(a) amount and the §741 amount are separate items: a gain is passive activity gross income of the PTP and a loss is a passive activity deduction of the same PTP (Reg. §1.751-1(a)(2); Temp. Reg. §1.469-2T(c)(2), (d)(5)). Losses are allowed up to the PTP’s passive income and gains for the year, and the amount not allowed is spread across every loss item in proportion to its amount, the capital loss and the prior-year unallowed losses included, with no loss item used first (Temp. Reg. §1.469-1T(f)(2)(ii)(A); Temp. Reg. §1.469-2T(d)(1)(ii); Form 8582 instructions, Special Instructions for PTPs). The part of a capital loss that §469 allows is then deductible for the year only to the extent §1211 provides, and the rest of that part is a capital loss carryover under §1212(b) (Reg. §1.469-1(d)(2)).
What changed: on a partial sale the estimate now counts the §751 amount and the capital amount separately and allows each loss item its proportional share of the PTP’s income and gains. It shows the K-1 losses allowed and carried forward, the capital loss allowed, the part of the capital loss that carries forward as a capital loss of the PTP, the amount deducted against ordinary income and the carryover. The estimate does not have your other capital gains and losses and assumes you have none. On that assumption the allowed capital loss is deducted against ordinary income up to $3,000 ($1,500 if married filing separately; the basic estimate has no filing status and uses $3,000) and the rest carries over. This is a convention of the estimate, not your return figure, and it is labelled beside the figures on the result, the PDF and the text export. Before this fix the basic estimate gave a capital loss on the units sold no tax effect, and the bracket-aware estimate deducted the whole capital loss within the limit without applying the passive loss rules to it. The sentences on the result, the exports and the form that said the losses offset “the gain on the units sold” are rewritten.
Also changed, with no change to a tax figure: the bracket-aware card now leads with the net estimated tax and labels the tax on the sale income before the K-1 losses allowed; it used to say the sale “adds” that amount “to your federal tax bill” even when the net was a reduction. The effective rate shows “n/a” when the total gain is zero or negative or the rate would be beyond 100%. The PDF and text exports round every dollar figure to cents. The bracket-aware result and exports now say that the §199A figure leaves out qualified REIT dividends and income from PTPs that are not tracked in the tool; the REIT/PTP component on a return is 20% of the combined amount of both (IRC §199A(b)(1)(B); Reg. §1.199A-1(c)(1)). A purchase date must now have a year from 1980 to the current year, and a position saved earlier with a year outside that range shows a prompt to fix the date.
Who is affected: anyone who ran a Sale Estimate for a sale of part of a position where the capital gain shown on the moderate row was negative, that is, where the §751 amount was larger than the total gain. In the basic estimate the corrected net estimated tax is lower than, or the same as, the figure shown before. In the bracket-aware estimate it can be higher or lower. The losses shown as used and carried forward change in both. Partial sales where the capital part is a gain or zero are not changed, and sales of an entire interest are not changed.
Sale Estimate: two figures and a "not yet determined" split where a partial sale allowed part of a sale-year K-1 loss and earlier losses
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From October 1, 2026 the Sale Estimate showed two figures when a sale of part of a PTP interest allowed only part of the PTP’s losses and a sale-year K-1 loss was entered or recorded: one with the losses carried over from earlier years used first, and one with the allowed amount spread in proportion. It said the split was not yet determined. When only part of a PTP’s passive losses is allowed in a year, the current-year loss and each carried-over loss are allowed in proportion to their amounts, and no loss is used first (IRC §469(b); Temp. Reg. §1.469-2T(d)(1)(ii); Temp. Reg. §1.469-1T(f)(2)(ii)(A); Form 8582 instructions, Special Instructions for PTPs). For §199A the allowed carried-over part is then used oldest year first (Reg. §1.199A-3(b)(1)(iv)(A)).
What changed: the estimate shows one figure. The rows for a second reading and the “not yet determined” text are removed. The “Sale-year loss freed by this sale” line and, in the basic estimate, the suspended-loss row now show the proportional parts.
Who is affected: anyone who ran a Sale Estimate from October 1, 2026 until the fix shipped for a partial sale with a sale-year K-1 loss and suspended losses from earlier years, where the sale allowed only part of the losses. The two figures and the “not yet determined” text also appeared when there were no earlier losses to split against; there the two figures were equal and nothing changes. The net estimated tax on the main row does not change: it already used the proportional split whenever the two readings gave different results. The second figure shown beside it was equal or lower and no longer applies. Where both readings gave the same net, the amounts on the two loss rows change and their total does not.
Sale Estimate: the §199A deduction was taken on the whole §751 amount even when suspended losses were used
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The K-1 Basis Tracker’s Sale Estimate (both the basic and the bracket-aware version) applied the 20% §199A deduction to the whole §751 ordinary amount and priced any suspended passive losses used at the full ordinary rate on a separate line. That is right only when every loss used arose in a taxable year ending before 2018. Under Treas. Reg. §1.199A-3 the deduction runs on the net amount of qualified PTP income for the year, and a previously disallowed passive loss that is allowed in the year of sale enters that net amount as a loss from a separate PTP, oldest loss first; losses from taxable years ending before January 1, 2018 are not taken into account (Reg. §1.199A-3(c)(1), (b)(1)(iv)(A)). If the combined amount is below zero, that part of the deduction is zero and the negative amount carries forward (Reg. §1.199A-1(d)(3)(iii)).
What changed: the §199A line is now 20% of the change the sale makes to the net amount of qualified PTP income from the position: the §751 amount less the suspended losses used that arose in taxable years ending after 2017, taken oldest first from the K-1 years recorded for the position. Losses from taxable years ending before 2018 are used first and leave that amount unchanged, so with a mix of older and newer losses only the newer part reduces it. When the losses used that arose after 2017 are larger than the §751 amount, the amount is below zero: the line is $0, the negative amount carries forward, and the result shows the carryforward. In the bracket-aware estimate, income from your other tracked PTPs is pooled first, so the amount may stay above zero and nothing carries forward. If the sale-year K-1 shows income, entered on the form or recorded for the sale year, both versions of the estimate compare the amount with the sale and the amount without it, and the comparison adds tax when the sale removes a deduction you would otherwise have had. The ordinary-income line is the full §751 amount at your rate. The loss benefit has its own lines: one for suspended losses and one for a sale-year loss the sale frees. The estimate no longer stops at $0: when the loss benefit and the §199A line are larger than the tax on the sale, the net is shown as a reduction, with the assumption behind it stated. Where part of the balance has no recorded K-1 year, the result says so and states the assumption it made (those losses are treated as arising after 2017). The PDF and text exports show the base, the deduction, its value at your rate and any carryforward as their own rows, and print the same notes as the result page. The When-to-Sell guide’s worked table was regenerated from the corrected engine. In the basic estimate the limit to 20% of taxable income over net capital gain (§199A(a)) is not modeled, and the result and exports say so; the bracket-aware estimate applies it.
Who is affected: anyone who used a Sale Estimate for a position with suspended passive losses from 2018 or later. The net tax shown was too low by up to 20% of the losses used that arose after 2017, at your ordinary rate: by that full amount when the §199A amount with the sale is not below zero, unless the old estimate had already stopped at $0. With a mix of older and newer losses, only the part that arose after 2017 counts. When the losses used that arose after 2017 take the §199A amount below zero, the old figure was still too low, by less, because the §199A amount stops at zero, unless the old estimate had stopped at $0; where it had stopped at $0 and the corrected estimate shows a reduction, the old figure was too high. Estimates are computed when you open them, so rerun them. Positions with no suspended losses are unchanged in total: the same figure now appears as separate lines.
Sale Estimate, bracket-aware mode and what-if rows: a recorded K-1 loss was counted twice, and some rows left out inputs
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In the bracket-aware Sale Estimate, a Box 1 loss on the latest recorded K-1 for the position being sold was deducted twice: once against the §751 gain, as if it were a sale-year item, and again when the suspended balance, which already contained that loss, was released. A disallowed passive loss is one deduction, carried to the next taxable year (IRC §469(b)). The estimate also treated the latest recorded K-1 as the sale-year K-1 when it was for an earlier year.
What changed: for the position being sold, a recorded K-1 counts as the sale-year K-1 only when its tax year is the sale year, which you now choose on the form (it defaults to the current calendar year), and a recorded loss is used once: as the sale-year item when it is on the sale-year K-1, and through the suspended balance when it is from an earlier year. The bracket-aware breakdown and its PDF and text exports now print the rows that mode computes (incremental tax, loss benefit, net, and the §199A amounts with and without the sale) in place of flat-rate rows that showed $0. The lot optimizer, the what-if rows and the custom what-if now use the same inputs as the estimate, including a sale-year K-1 amount you entered and your share of partnership liabilities, and run in the same mode, so one sale gives one number.
Who is affected: anyone who used the bracket-aware estimate for a position whose latest recorded K-1 showed a Box 1 loss: the net tax shown was too low by up to that loss at your marginal rate (not counting the 3.8% net investment income tax, which ticket 085 covers). Anyone who compared the what-if or optimizer rows with the estimate after entering a sale-year K-1 amount, or for a position with a recorded share of partnership liabilities: those rows could show a different figure for the same sale. Rerun the estimate.
Sale Estimate and "sold today" figures left your share of partnership liabilities out of the amount realized
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The K-1 Basis Tracker’s Sale Estimate (both the basic and the bracket-aware version) and the position page’s “What This Means If You Sold Today” figure computed the gain as cash proceeds minus adjusted basis. The adjusted basis the tracker carries includes your share of the partnership’s liabilities (Schedule K-1 Item K, through Lines 3 and 9 of the IRS Partner’s Basis Worksheet), but the cash proceeds did not include the same share. When you sell partnership units the buyer takes over your share of the partnership’s liabilities, and that share is part of your amount realized (IRC §752(d); Treas. Reg. §1.1001-2(a)(1) and (a)(4)(v): “The liabilities from which a transferor is discharged as a result of the sale or disposition of a partnership interest include the transferor’s share of the liabilities of the partnership”; Reg. §1.752-1(h)). Every estimate for a position with a recorded Item K share therefore understated the gain, on full and partial sales alike, by the share allocable to the units sold.
What changed: the amount realized is now cash plus the Item K liability share of the lot at your last recorded K-1 year-end, allocated to the units sold in proportion to units (the same allocation the basis uses). The Sale Estimate waterfall, its PDF and text exports and the “sold today” figure show the liability share as its own line, and state that basis is as of your last recorded K-1 year-end. The engine reproduces the worked examples in Treas. Reg. §1.1001-2(c) (Example 3) and Reg. §1.751-1(g) (Example 1) exactly. The PTP passive-loss guide and the distributions guide now describe the amount realized the same way. Positions with no Item K share recorded are unchanged.
Who is affected: anyone who used a Sale Estimate or the sold-today figure for a position whose K-1s carry Item K liabilities. The gain shown was too low by that share; because the partial-sale suspended-loss offset (corrected the same day) is capped at the gain, that figure could be too low as well. Estimates are computed when you open them, so rerun them. The §751 ordinary-income estimate was not affected; it comes from a depreciation proxy and, at sale, from the partnership’s sales schedule.
§751 recapture guide: "released losses first offset §751 ordinary income, then capital gain" had no source
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The §751 recapture guide (FAQ and the suspended-losses section) and, until September 28, the When-to-Sell guide said that suspended passive losses released at sale “first offset §751 ordinary income, then any remaining losses offset capital gain.” No IRS rule says that. Under Temp. Reg. §1.469-1T(f)(2)(ii) a disallowed loss is disallowed ratably across the activity’s deductions, and under Reg. §1.469-1(f)(4) it is treated as a deduction from the activity in the following year, so an allowed prior-year loss is reported on the form its items came from (a Box 1 loss on Schedule E as a passive loss from the PTP) while the §751 amount stays on Form 4797 and the capital gain on Form 8949 (Instructions for Form 8582 (2025), Special Instructions for PTPs). Section 469 does not change the character of the gain (Temp. Reg. §1.469-1T(d)(1)).
Both passages now describe where the allowed loss is reported and drop the ordering. The K-1 Basis Tracker prices the loss benefit at the ordinary marginal rate, which matches an ordinary Box 1 loss deducted on Schedule E; that pricing is an estimate convention and is labelled as such.
PTP passive-loss guide and the Sale Estimate: a partial sale does use suspended losses, up to the gain on the units sold
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The PTP passive-loss guide said that selling part of an MLP position leaves the suspended losses untouched (“partial sales don’t count”), and the K-1 Basis Tracker’s Sale Estimate applied $0 of suspended losses to every partial sale. That is wrong. Under the Instructions for Form 8582 (2025), gain from disposing of less than an entire interest is part of that activity’s net income for the year (“Disposition of Less Than an Entire Interest”), and for a publicly traded partnership you combine current-year income, gains and losses with prior-year unallowed losses; on an overall loss, the losses are allowed to the extent of the income and the excess carries forward (“Special Instructions for PTPs”). The regulation behind it is Temp. Reg. §1.469-2T(c)(2)(i)(A): gain on disposing of an interest in a passive activity held through a partnership is passive activity gross income of that activity. So on a partial sale, the gain on the units sold, both the §751 ordinary portion and the capital gain, is income of that PTP for the year, and the PTP’s losses, current-year and prior-year unallowed, are allowed to the extent of that income. What a partial sale still does not do is free the losses against wages or other income; that requires disposing of the entire interest in the PTP in a fully taxable transaction to an unrelated party (IRC §469(g)(1)(A); §469(k)(3)).
What changed: the guide’s partial-sale section, FAQ and Form 8582 section were rewritten with the rule and a worked figure ($3,000 suspended; partial-sale gain of $1,500; $1,500 offsets, $1,500 carries forward). The same sentence was corrected on the §751 recapture guide’s FAQ, the TurboTax K-1 guide and the When-to-Sell guide. The Sale Estimate (both the basic and the bracket-aware version) and the pre-sale check now apply suspended losses to a partial sale up to the gain on the units sold (the sale-only floor of what the return allows) and show the balance carried forward. Full-disposition results are unchanged. Sale estimates are computed when you open them and are not stored, so nothing needs to be recomputed.
Who is affected: anyone who used the guide or a partial-sale estimate to decide between selling part or all of a position: the estimate overstated the tax on a partial sale by the suspended losses it should have applied, at the marginal rate. The Sale Estimate still cannot see the year-of-sale K-1, so its partial-sale figure counts only the gain; current-year items from the same PTP enter the same netting on the return. Reported by a reader on September 28, 2026.
Irrevocable-trust guide: the §751 calculator's footnote gave the 2024 trust-bracket threshold
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The footnote under the §751 year-of-sale calculator on the irrevocable-trust guide said trust rates compress at $15,200. That is the tax year 2024 figure; for tax year 2025 the 37% trust bracket starts at $15,650 (Rev. Proc. 2024-40, §3.01). The calculator itself already computed trust tax from the site’s tax-constants module, so its results were not affected. The footnote now reads the threshold from that module and states the tax year.
MLP-in-an-IRA guide: the trust-bracket threshold and the single-filer brackets were 2024 figures
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The guide to MLPs in an IRA said the 37% trust rate on UBTI starts at $15,200 of income, and its bracket table, captioned as 2025, carried that figure in the trust column and tax year 2024 amounts in the single-filer column from the 24% row down (the 24% row also showed the 22% bracket). For tax year 2025 the trust 37% bracket starts at $15,650 and the single-filer 37% bracket at $626,350 (Rev. Proc. 2024-40, §3.01).
The opener, the table, the worked paragraph beneath it, the FAQ answer on selling inside an IRA and the key-takeaways line now carry the 2025 amounts, matching the site’s tax-constants module. No calculator used the stale figures: the K-1 Basis Tracker and the Portfolio Simulator read their brackets from that module, which already held the 2025 values.
API and MCP tools: tax on sale understated when §751 recapture exceeds total gain
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The API capped §751(a) ordinary income at the total gain on a sale. Under Reg. 1.751-1(a)(2), ordinary income is figured on the §751 property by itself and the remainder is capital gain or loss under §741, so ordinary income can exceed the total gain. When cumulative §751 recapture was greater than the gain, the sell-now tax, the deferred tax eliminated at death, the break-even sell price, and the estate and ETF comparison figures built on them were too low. In all other cases results were unchanged.
The website simulator has used the correct treatment since July 2, 2026. If you used these tools for a position where recapture is large relative to the gain, please run it again.
The §751 recapture estimate included Box 13 amounts; basis was never affected
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The K-1 Basis Tracker estimates §751 ordinary income at sale from a running total of depreciation-type items on your K-1s, shown as a 100% / 80% / 60% range. Every §751 estimate produced before September 17, 2026 included Box 13 (other deductions) amounts in that running total.
On the K-1s we checked (Energy Transfer, tax years 2022 and 2024), Box 13 reported cash contributions (code A), investment interest expense (code H) and excess business interest expense (code K). None of these is depreciation, so including Box 13 overstated the estimate by those amounts. Code letters can differ by tax year. The estimate no longer includes Box 13. Handling each Box 13 code separately is planned. Basis figures were never affected.
What was affected: the §751 range on the Sale Estimate and its PDF and text exports, the cumulative §751 exposure card, the premium bracket-aware sale estimate and Tax Impact Panel, and the LP disposition tool’s §751 input. Your basis figures were never affected: the basis worksheet does not read this estimate.
The estimate now includes only §179 deductions (Box 12) and Box 1 losses. It remains an estimate: when you sell, your sponsor’s sales schedule states the actual §751 amount — use it, not this estimate.
This corrects itself on your next visit. Every stored worksheet is stamped with the engine version that computed it; on load, records computed under the earlier definition are recomputed from your stored K-1 inputs and the §751 figures update. Nothing you entered changes. If you exported a sale estimate before September 17, 2026, regenerate it afterward.
Box 20 code V (unrelated business taxable income) could be read into Box 11 by the K-1 PDF import
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The K-1 Basis Tracker’s PDF import could place the Box 20 code V amount (unrelated business taxable income, an information-only code) into Box 11 (other income). Box 11 feeds the basis worksheet’s other-income increase, so a misplaced amount changed the stored inputs for that year and every later year’s beginning basis. The effect depends on the sign of the amount that was misplaced:
Positive 20V amount → ending basis OVERSTATED by that amount. The worksheet adds positive other income to basis; the overstatement carries into every later year’s beginning basis. At sale, an overstated basis understates taxable gain. In the premium bracket-aware estimates (Tax Impact Panel, bracket-mode Sale Estimate) the same amount was also counted as ordinary income, overstating estimated tax for that year.
Negative 20V amount → ending basis UNDERSTATED by that amount, to the extent basis was available. The worksheet treats negative other income as a loss subject to the basis limitation: it reduces basis up to the basis available, and any excess is carried forward as a suspended loss that would release in a later year. At sale, an understated basis overstates taxable gain. In the premium bracket-aware estimates the amount reduced estimated ordinary income, understating estimated tax.
Neither case affects the tool’s §751 recapture estimate or its passive (§469(k)) tracking, which do not read Box 11. Any K-1 imported from a PDF before September 17, 2026 may be affected.
Who is affected: any user who imported a K-1 PDF showing a Box 20 code V amount and accepted the extraction without correcting Box 11 on the review screen or in Edit K-1. The misplaced amount is visible: it appears as “Box 11 — Other income” on the extraction review screen, in the position’s year detail, and in the basis-report PDF and text exports. A user whose K-1 has no Box 20 code V amount, or who corrected Box 11 before calculating, is not affected.
What you need to do — this does NOT correct itself. The tool cannot tell a misplaced 20V amount from a real Box 11 entry after the fact. The fix is a manual edit: for each stored year that came from a PDF import, open Edit K-1 (detailed mode), compare Box 11 with the Box 11 line printed on that year’s K-1, correct it, and save; later years recompute from the corrected year automatically. Do not rely on re-uploading the PDF to fix a year you have already edited: re-uploading replaces ALL stored inputs for that year, including any values you corrected by hand (for example Box 13), with no prompt. Users who hand-edited a year should use the manual edit. Re-uploading a year that has no hand edits is an acceptable alternative: the import now reports Box 20 code V in its own place and clears a Box 11 amount that merely equals it, with a warning. If you exported a CPA report or sale estimate before correcting, regenerate it afterward.
The import now records Box 20 code V as information only (it is never used in the basis worksheet) and shows it on the review screen, in Edit K-1, and in the year detail. Box 20 codes other than A, N and V are still not captured.
Editing a K-1 year on a position with more than one lot shrank that year's totals
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On a position with two or more purchase lots, the K-1 Basis Tracker stores each year’s K-1 as one share per lot. Opening Edit K-1 for a stored year from a year row or from the basis timeline filled the form with the selected lot’s share instead of the whole position’s totals. Pressing Calculate then treated that share as the whole K-1 and split it across the lots again. Every box in that year shrank to the selected lot’s fraction of the position (for two equal lots, half), whether or not anything in the form was changed, and every later year recomputed from the shrunken year. A position with a single lot was not affected, and neither was entering a year for the first time or importing it from a PDF, CSV or spreadsheet.
Affected window: since multi-lot distributions were introduced, until September 17, 2026.
Who is affected: anyone who, on a position with more than one lot, opened Edit K-1 for a year that was already stored and pressed Calculate. Each such edit reduced that year’s totals; repeated edits compounded. Ending basis for that lot set is misstated from that year forward, and any sale estimate or report drawn from it is misstated with it.
What you need to do — this does NOT correct itself, and the tool cannot detect it. The tracker does not store the totals you entered, only the per-lot shares, so a shrunken year looks the same as a small K-1. For every position with more than one lot, open Edit K-1 for each stored year. The form now holds the position totals and says so: “K-1 totals for your whole [ticker] position (N lots). Lot shares are re-allocated when you calculate.” Compare each box with the K-1 for that year, re-enter any box that differs, and save; later years recompute automatically. Re-uploading the K-1 PDF also restores a year, but it replaces every stored input for that year, including values you corrected by hand. If you exported a CPA report or sale estimate from an affected position, regenerate it afterward.
Box 18B and Box 18C were not accepted as inputs in the K-1 Basis Tracker
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From May 11, 2026 until September 9, 2026, the K-1 Basis Tracker’s computation engine supported Box 18B (other tax-exempt income, worksheet Line 4m) and Box 18C (nondeductible expenses, worksheet Line 12), but no entry path — the Edit K-1 form, the PDF upload, or the CSV import — could populate either box. Every stored year therefore computed with both at zero. Before May 11, 2026 the engine had no Line 12 step at all, so the Box 18C omission extends back to the tool’s launch.
Effect per year, per K-1:
Box 18C omitted → ending basis OVERSTATED by the Box 18C amount (IRC §705(a)(2)(B) reduces basis for nondeductible, non-capital expenditures). The overstatement carries into every later year’s beginning basis. At sale, an overstated basis understates taxable gain. Nearly every MLP K-1 reports a small Box 18C amount, typically single or low double digits per year.
Box 18B omitted → ending basis UNDERSTATED by the Box 18B amount (IRC §705(a)(1)(B) increases basis for tax-exempt income). Box 18B is rare on midstream MLP K-1s.
Who is affected: every user with stored K-1 years whose K-1s show a nonzero Box 18C (most) or Box 18B (few).
What you need to do — this does NOT correct itself. The tool cannot recover a number it never stored. For each stored year, open Edit K-1 (detailed mode), enter Box 18B and Box 18C from that year’s K-1, and save; later years recompute from the corrected year automatically. Re-uploading the K-1 PDF also captures both boxes now. If you exported a CPA report or sale estimate before entering these values, regenerate it afterward.
Box 20N (business interest expense) in the K-1 Basis Tracker’s basis worksheet
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The K-1 Basis Tracker mishandled Box 20N (business interest expense) in two distinct windows:
Before May 11, 2026: the engine added Box 20N back on worksheet Line 4n but had no Line 15q deduction at all. In years with positive Box 1+2+3 income, ending basis was overstated by the added-back amount. An overstated basis understates taxable gain at sale — if you sold in this window and your K-1s carried Box 20N, your reported gain may have been too low; review with your CPA.
May 11 – September 4, 2026: the rebuilt engine deducted the full Box 20N on Line 15q while capping the Line 4n addback at positive Box 1+2+3 income. In any year where Box 20N exceeded that positive income — loss years, which are typical for midstream MLPs — ending basis was understated by the difference, up to the full Box 20N per year. An understated basis overstates taxable gain at sale and can suspend losses too early. Years where Box 20N ≤ positive Box 1+2+3 were unaffected in this window (the addback and deduction cancelled).
The engine now carries the same capped amount on both lines: Box 20N on its own does not change ending basis. This matches the IRS treatment — per the TY2025 Partner’s Instructions, Code N: “Deductible BIE is reported elsewhere on Schedule K-1 and the total amount is reported here for information only and was already included as a deduction on another line of your Schedule K-1.” (The IRS worksheet enters the full 20N on Line 15q while excluding BIE from the loss lines 15a–15c; the tool computes the identical ending basis by carrying the Line 4n capped amount on both lines.) Business interest expense reduces basis as an undeducted item only when the partnership allocates it as excess business interest expense, Box 13 code K. See the corrected walkthrough in the K-1 Basis Worksheet Explained.
Who is affected: any user whose K-1 entries carry a nonzero Box 20N — overstated basis before May 11, 2026 (income years); understated basis from May 11 until the fix shipped (years where 20N exceeded positive Box 1+2+3, checked per year and per lot share).
This corrects itself on your next visit. Every stored worksheet is stamped with the engine version that computed it; on load, records computed under superseded math are recomputed from your stored K-1 entries — no re-entry needed. If you exported a CPA report or sale estimate from an affected year before September 4, 2026, regenerate it after your next sign-in.
By Lucas Andersen
— MS Finance; 20 years in asset management and institutional
energy trading; builds partnership-taxation tools and
basis-reconstruction workpapers.