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GAW61
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Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

How do you enter Final k-1 with excess deductions . Should go on Sch A line 16

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Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

"Should go on Beneficiaries 1040 Schedule A line 16"

At this point in time, the IRS is taking the position that excess deductions on the termination of estates are  miscellaneous itemized deductions and not deductible.

See https://www.irs.gov/publications/p529#en_US_2018_publink10004383

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25 Replies
DDollar
Expert Alumni

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

What is the code letter in box 11 of K-1?
GAW61
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Box 16 Code A  and C

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

I'm having the same issue. I tried it in another software and it wasn't putting the excess deductions on line 16 of schedule A like this IRS Instruction says it should (see page 2): <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf">https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf</a>  - I then decided to try TruboTax Premier online hoping they'd get it right but so far they haven't. The IRS instruction for this wasn't published until February 5th of this year so it may have been too late to code the software for this change. Can Line 16 of Schedule A be over-ridden when using the online version?

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Line 16 cannot be overriden with the Online version, only the desktop (CD/Download) versions.

Also, the IRS instructions in the link you posted (for Sch K-1 (1041)) conflict with the IRS instructions for Line 16, Sch A. I can refer you to the link below to IRS Notice 2018-61 and will tell you that future deductibility doesn't look good considering the language at the bottom of page 7 to the top of page 8.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-drop/n-18-61.pdf">https://www.irs.gov/pub/irs-drop/n-18-61.pdf</a>

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Well that does conflict but they did request comments on that and the relatively new i1041sk1 (Feb 5, 2019), seems pretty clear on what they decided wrt Excess deductions. I'm going to take the deduction when I file. It's pretty significant in my case. Maybe I'll do it by selecting one of the acceptable deductions for line 16 and if the IRS questions me, I'll clarify it later (or I'll just file by mail).

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

"Should go on Beneficiaries 1040 Schedule A line 16"

At this point in time, the IRS is taking the position that excess deductions on the termination of estates are  miscellaneous itemized deductions and not deductible.

See https://www.irs.gov/publications/p529#en_US_2018_publink10004383

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

They are deductible. See page 2 of the instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040: <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf">https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf</a>
GAW61
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Thanks for all the answers  . See link in 1st Paragraph under Whats new on  https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf  Not sure why IRS then says they are allowed  on later in this Pub?  Looks like we are waiting on new regulations to be published?  I suspect thats why Turbo Tax wont put these on Line 16 Sch A? Hope they update software ASAP when these regs allow these deductions.  

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

I suspect it is because the IRS instructions specifically limit the expenses on Line 16 to only those listed.

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Paragraph 1 refers to "Miscellaneous" Deductions which have been suspended. Box 11, Code A are "Excess" Deductions so it's not really a conflict. There's a comment letter to the IRS/Treasury from AICPA that explains how this all came about (<a rel="nofollow" target="_blank" href="https://www.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/20181031-comment-letter-o...>). It seems the only place available for a beneficiary to take this deduction was under Miscellaneous Deductions. When that got suspended, the ability to take the excess deduction inadvertently got swept away with it. The updated instruction took the recommendation of the AICPA and fixed the problem. Now we have to wait for the various tax software providers to catch up (or let us override line 16 without losing the ability to efile.
sgove6
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

@Geobrick thank you for doing the research to help people like myself who are in this situation. I have found all the links from this discussion and similar ones, and it does appear as you said that the AICPA's recommendations were adopted by the IRS... which makes it all the more puzzling why Intuit can't fix this within the timeframe to allow this entry and still support efiling. Looks as though I will be mailing my return this year... :(
@GAW61 FYI, I found another link from last summer that summarizes Notice-2018-61 but pre-dates AICPA's comments and recommendations. (<a rel="nofollow" target="_blank" href="https://www.wealthmanagement.com/estate-planning/irs-announces-forthcoming-section-67g-clarification...>) I'm posting it here because it clarifies from the notice that "Section 67(e) Expenses Aren’t Miscellaneous Itemized Deductions". It also references the request by IRS for comments regarding beneficiaries that were addressed by AICPA.
GAW61
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

I can’t find the final regulations that were promised perhaps that’s why TurboTax has not updated their software?

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

I don't believe any regs have been promulgated so deductibility continues to be arguable.
sgove6
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Perhaps... Still, the instructions that you previously referenced do provide for deduction of beneficiary’s share of the excess deductions on termination, as stated for Box 11 Code A. (<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i1041sk1">https://www.irs.gov/instructions/i1041sk1</a>)
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