Disclaimer: I am not an accountant or a tax expert; only the poor schlump that has to figure out my wife's and my taxes. So here is how I finally resolved this (in the Desktop version).
I Think PatriciaV gave the best explanation, without definitively answering how to deal with it. I think DianeW gave the closest to a method of dealing with it without giving a rationale. My understanding and approach is as follows:
The problem: information in your K-1 for the code AJ is reporting two figures: An aggregate for income and and aggregate for deductions. Note that these are only relevant (rephrasing my original answer) if the K-1 is reporting an overall loss for the business, if which is going to end up on your schedule E, along with other potential losses from other businesses, like on a Schedule C. if this partnership by itself, or the sum of income or losses from multiple sources that may appear on your 1040 Schedule 1 (including those from other K-1s, Schedule C income, etc.) result in a loss. Hypothetically, one partnership could have no loss, but another one might. All of the income and losses need to be accounted for, which is why you have the information here, even if it is positive. If there is a loss, and it the loss is also subject to the excess business loss rules (explained by PatriciaV), you would have to figure that limitation separately on Form 461 using the information from each source of income or loss, which TurboTax does not include. However, TurboTax does not give a guide to how to enter the information you've received.
Actually, what TurboTax is giving you is a record-keeping mechanism for recording the information you received on your K-1, to be used if needed to fill out a Form 461. If you have no losses, the AJ information is not going to appear on any forms the IRS will see in your submission. However, for the sake of completeness, you still might want to get these numbers into TurboTax.
So, in order to keep TurboTax consistent with the K-1, here's what I did:
- In the Step-by-Step, enter two AJ line entries in the Box 20 info for the two figures provided in my K-1 Statement explanation for the Aggregate Income and Aggregate Deduction. If this is all you do, you will get the error about the gasification amount.
- When the Step-by-Step asks for Other Box 20, information, I put two line items, which I labeled "AJ - Aggregate Business Income" and "AJ - Aggregate Business Deductions" with the appropriate amounts from the K-1. Now, TurboTax reports no errors.
This can also be accomplished (or double-checked) in the desktop version by going into the forms and putting the information in the relevant places. This would include the K-1 Partner form Part III item 20 and/or the K-1P Addl. Info, same section.
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