IRS instructions definitely call for a code Z. This is just a small REIT dividend on a p'shp that has no income on lines 1-3.
Solution: You cannot pull a Code Z down on the Form 1065 pp.5-6, but no problem. On the 199A worksheet check the box marking the business as active EVEN if lines 1 through 3 of K-1 are zero or the p'shp just generates portfolio income (e.g., a stock portfolio). The broker's 1099 input the SEC199A dividend but you will also need to put it down on the 199A worksheet line 5 as other income. There is no need to type in anything more on line 20 of the Form 1065 schedule K. Turbotax will automatically generate the appropriate material on each individual's K-1. Look at each K-1 for a cross-reference to a Statement A and then check the Statement A for the REIT dividend QBI. Beware of Turbotax generating an unrequested ZZ explanation statement.
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You are entering a Schedule K-1 form 1065 into TurboTax Online.
At the screen Check boxes that have an amount or are checked on the form, have you checked Box 20?
At the screen Enter Box 20 Info, are you able to select Z-Section 199A information at the down arrow?
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