Code AJ

[xenon_001]

Hello:

The previous links about known issue and its resolution no longer work, they lead to “We're sorry, we can't find the page you requested.” error.

I have received a Schedule K-1 with two codes on line 20:

Code Z -ORDINARY INCOME (LOSS) - with a negative amount, say, -p.

Code AJ -AGGREGATE BUSINESS ACTIVITY DEDUCTION - with a positive amount, say q.

When I input these numbers in the K-1 workflow, TurboTax flags an error during Smart Review, asking about “"basis of gasification”.

I have been waiting since Feb 19 for a fix to this issue, However, the previous link to the known issue have now silently disappeared:  https://ttlc.intuit.com/turbotax-support/en-us/help-article/schedule-k-1/receiving-error-turbotax-sc... 

i have updated my software and am still receiving this error (Premier, desktop version) as of 19 March 2024, a full month since I first ran into this.

Can you please help?

[PatriciaV]

Have you tried deleting the K-1 and re-entering it? A recent update should have resolved this issue, but it may not apply to an existing K-1. Also, check the code for the ordinary income. In most cases, both entries are made under Code AJ. The IRS made significant changes to Schedule K-1 codes this year and it's possible the old code was used instead of the new one.

If you follow the steps below, the information from Schedule K-1 Box 20 Code AJ will appear on an Additional Information worksheet as part of your return. How you use this information is left for you to determine and enter as appropriate. Note that Code AJ is for Excess Business Losses, which would be used only if your net losses from all businesses are more than $289,000 ($578,000 if filing a joint return). If this doesn't apply to your tax situation, you may completely omit the following entries.

1. Working through the Schedule K-1 entry screens, check the box for Box 20.
2. Continue to the page to Enter Box 20 Info.
3. Choose AJ - Excess business loss limitation from the drop down.
4. Do not enter an amount here.
5. Continue to the page to Enter Box 20 Other Information Amounts.
6. In the section under "Other Description", enter the Supplemental Information provided with your K-1. Choose relevant descriptions then enter the amount for each line.
7. Continue to back to the K-1 Summary page.

You can review the result using Forms Mode.

1. Find K-1 Partner [name of K-1] in the forms list on the left.
2. Click on K1P Addl Info 1 under that form to open it in the large window,
3. Scroll to the bottom of the form to Code AH to ZZ: Other Information.
4. Confirm that your entries for Box 20 Code AJ appear on Line 6.
5. Click Step-by-Step to return to the main screens.

@xenon_001 

[xenon_001]

Thanks for your answer, Patricia.

> Also, check the code for the ordinary income.

> In most cases, both entries are made under Code AJ.

> The IRS made significant changes to Schedule K-1

> codes this year and it's possible the old code was used

> instead of the new one.

I think Box Z is correct?

On the next page, the K-1 says,

SCHEDULE K-1 SECTION 199A INFORMATION, BOX 20, CODE Z

TRADE OR BUSINESS - ORDINARY INCOME (LOSS) [_amount_]

And as per IRS instructions for Schedule K-1 at https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf it seems Code Z is the right code for Section 199A information.

Based on the above, should I keep this entry under code Z or rename it to code AJ as per your suggestion above?

[PatriciaV]

Yes, Box 20 Code Z is used for Section 199A entries, if that is the description provided on Statement A.

This thread was mainly for Box 20 Code AJ Aggregate Losses, not Code Z QBI.

@xenon_001 

[Eddie29]

Hi @PatriciaV , I have the same scenario as this post and I have used a different browser as I use TurboTax online, deleted the K1 and entered all the information again and I still am asked for basis of gasification when the K1 has no relation to a gas or oil industry.  I want to confirm that your step by step direction below applies to this scenario?

It doesn't seem like this is a fix to the issue but more of workaround because if I choose "no" for oil and gas question I even be show the next screen for additional box 20 information related to gasification.

Thank you.

[PatriciaV]

The correct steps are:

1. Delete your K-1 entry. 
2. Then delete Form 3468 (How do I view and delete forms in TurboTax Online?)
3. Save your return and restart TurboTax. 
4. Enter the K-1 info again. 
5. Run SmartCheck. 

In most cases, this resolves the error message created by your original entry (which remains even after you delete the K-1).

@Eddie29 

[BradyJB4449]

Would it be acceptable to do the following for Schedule K-1 Box 20 Code AJ step-by-step?

(1) Select the code AJ - Excess business loss limitation

(2) For the amount field, right click and add supporting details

(3) Add the aggregate business activity gross income

(3) Subtract the aggregate business activity deductions

The above documents both numbers in the supporting details.

Would this be an acceptable method for code AJ?  Are there downsides to doing this?

[Tami5]

The problem is there are not enough lines to add both AJ numbers, and the next form is no help. The tax software should allow for what is on the Schedule K!

[PatriciaV]

In the Schedule K-1 interview, choose Box 20 Code ZZ instead of AJ. Leave the amount blank. Continue until you see "Enter Other Information Detail." Enter two lines: Label one line "AJ - Aggregate Business Income" with the number from Box 20 additional information and the second "AJ - Aggregate Business Deductions" (usually a negative number).

Your entries appear on the K-1 worksheet under Box 20 Code AJ to ZZ Line 6, but will not be used in your tax return for the following reason:

This information will be used only if your net losses from all businesses are more than $289,000 ($578,000 if filing a joint return). If this doesn't apply to you, leave Box 20 Code AJ blank (or do not include this code).

If the excess business loss does apply to you, this information will allow you to figure any excess business loss limitation that may apply. See IRS Instructions for Form 461 - Limitations on Business Losses. TurboTax does not include Form 461, which must be attached to your tax return (print and mail).

@BradyJB4449 

@Tami5 

[hdrader39]

Where do I enter it in the 1040 return ?

[PatriciaV]

Please clarify what exactly you need to enter on your 1040 return. 

Also, which version of TurboTax are you using: TurboTax Online or TurboTax for Desktop? Windows or Mac? If Online, which browser?

@hdrader39

[Steve768]

I see how you can add the additional AJ lines for Box 20 but I see no way to change the text provided from anything other than "Excess Business Loss Limitation".   Going into forms at this point only shows one AJ line with the same text followed by "*" which goes to a note underneath stating "Not provided for in program. Manually enter on appropriate tax form."  So giving @PatriciaV  suggestion a go with ZZ instead of AJ. 

My AJ entries on the K-1 are:

Aggregate Business Activity Gain (Loss) of Dispo. of Property  

Aggregate Business Activity Gross Income

Aggregate Business Activity Total Deductions

[PatriciaV]

Taken together, the three lines for Box 20 Code AJ are used to calculate Excess Business Loss Limitation.

However, the information for Code AJ is relevant only if your net losses from all businesses are more than $305,000 ($610,000 if filing a joint return). If this doesn't apply to you, leave Box 20 Code AJ blank (or do not include this code).

If the excess business loss does apply to you, this information for Code AJ will allow you to figure any excess business loss limitation that may apply. See IRS Instructions for Form 461 - Limitations on Business Losses. TurboTax does not include Form 461, which must be attached to your tax return (print and mail).

If you wish to record the amounts on your return for completeness, you will need to be using TurboTax Desktop. Follow these steps: 

1. Enter the total of all lines Code AJ in the amount for this code.
2. Go to Forms Mode, open K-1 Partner for this investment, and click the QuickZoom under Line 20 for "codes E, T, AS, and ZZ." 
3. Enter all lines for Code AJ under Code ZZ in the yellow lines/boxes. The total here must match the amount previously entered for Code AJ. This information does not affect your tax return. 

@Steve768