Line 17 on K-1 has AC* and STMT in box. What do I do with that, it says see shareholders information. Where do I find that. Thanks

[IreneS]

What type of entity issued the K-1?  partnersip, S-Corp, or  Estate/Trust?

[mgsmc]

s-corp

[IreneS · Accepted solution]

There should be a statement, either at the bottom of the K-1 or on a separate sheet, that contains the extra information you need to enter the Code AC detail.

1. On the screen, Check Boxes That Have an Amount be sure to mark the box Box 17 Info and click Continue.
2. On the screen, Enter the Box 17 Info, enter code AC and the dollar amount and click Continue.
3. On the next screen, Enter Code AC Detail, enter the amounts for the categories listed and click Continue.
4. On the next Enter Code AC Detail, enter the description and amount of categories not listed on the first screen and click Continue.  These amounts will not automatically flow into your return. 
   
5. Instructions for entering the amounts in TurboTax appear on the next screen, How to Enter Code AC Information.
   

[mpzmbz]

The K-1 I received (S Corp) shows "STMT" in Box 17, Code AC.  The supporting documentation for this shows Gross Receipts each for the year 2019, 2018 and 2017.  So what do I put into the box in Turbo Tax?

[Anonymous]

I have the exact same question. Is there an answer yet from anyone?

[WendyN2]

Typically, it is explained to you in additional information (supplementary) that should have been provided to you along with your K1. If you did not receive this additional supplemental information, and do not wish to or are not able to contact the provider of the K1, here are some bit of information that will help guide you through a better understanding of this code as it relates to Box 17 on your K1...

IRS K1       specifically pages 20-24

BOX 17:  Code AC. Gross receipts for section 448(c) Use the gross receipts amount to figure the business interest expense you can deduct, if applicable. See section 163(j) and the Instructions for Form 8990 for details.

The section 163(j) limitation is applied at the partnership level. As provided in Q/A 1, the amount of deductible business interest expense in a taxable year cannot exceed the sum of the partnership's business interest income, 30% of the partnership's ATI, and the partnership's floor plan financing interest expense.     Sep 24, 2020

IRS Section 163(j)

IRS Instructions for Form 8990

[WaltPDX]

WendyN2,

Perhaps you can more directly answer the question. In particular, what should be done in the Turbo Tax data entry for Line 17 Code AC - Gross Receipts for Section 448(c)? 

My understanding is that the gross receipts data for the last 2 or 3 years in the Statement is to be used to determine if the taxpayer is subject to section 163(j) and required to file the form 8990.  If the business providing the K-1  is classified a "Small business taxpayer" that meets the "Gross receipts test" then the taxpayer is not subject to section 163(j) and not generally required to file the form 8990.  That is, in that case, the data in the statement for AC is for informational purposes only.  At that point how shall the data be entered in Turbo Tax?

- Not entered at all?

- Should the Shareholder Amounts over the 2 or 3 years be averaged and that average be entered.

- Should the most recent year Shareholder Amount be entered?

- Should I "Add Supporting Details" to this line? If so, what should be entered? If you just enter a sine with an amount for those 2 or 3 years the Supporting Details" page totals the amounts. This does not seem appropriate.

- Something else?

Please reply with guidance.

[Anonymous]

My accountant informed that this information is considered not required to be filled on personal tax return.  

[Irene2805]

Your accountant is correct.  On Line 17 of a K-1S, Code AC deals with the gross receipts test for a  corporation or partnership.  It has no effect on your personal return.

[WaltPDX]

So, when entering the K1 Line 17 in Turbo Tax, should we not include the code AC at all. That is, jut omit it from the K-1?

[Captain2k1]

Can someone PLEASE reply to "WaltPDX" question.. This would vastly clarify this outstanding question.

[WendyN2]

@WaltPDX : 

Many changes have been made due to covid and the CARES Act. having said that (and including as much as I can to assist via back and forth messaging), there should be a statement, either at the bottom of the K-1 or on a separate sheet, that contains the extra information you need to enter the Code AC detail.

1. On the screen, Check Boxes That Have an Amount be sure to mark the box Box 17 Info and click Continue.
2. On the screen, Enter the Box 17 Info, enter code AC and the dollar amount and click Continue.
3. On the next screen, Enter Code AC Detail, enter the amounts for the categories listed and click Continue.
4. On the next Enter Code AC Detail, enter the description and amount of categories not listed on the first screen and click Continue.  These amounts will not automatically flow into your return. 
5. Instructions for entering the amounts in TurboTax appear on the next screen, How to Enter Code AC Information.

Code AC: 

Gross receipts for section 448(c) Use the gross receipts amount to figure the business interest expense you can deduct, if applicable. See section 163(j) and the Instructions for Form 8990 for details.

Section 163(j):

Prior to the CARES Act, the business interest expense deduction was limited to the sum of the taxpayer’s business interest income, plus 30% of adjusted taxable income (ATI), plus floor plan financing interest expense. The CARES Act added several special rules, which should be taken into account for 2020 tax planning, including:

• The Act retroactively increased the section 163(j) limitation to 50% of ATI (up from 30%) for 2019 and 2020, for taxpayers other than partnerships. Taxpayers have the option of electing out of this rule and using 30% instead of 50%.
• For partnerships, the increase to 50% only applies for 2020. Partners allocated excess business interest expense (EBIE) from 2019 can deduct 50% of that amount as an interest deduction in their 2020 tax year, without limitation.
• The Act also allows taxpayers to elect to use their 2019 ATI to calculate the 2020 section 163(j) limitation. This election will be helpful for taxpayers experiencing losses in 2020 due to current economic conditions.

Form 8990 Instructions:          IRS Form 8990 Instructions

[Joshes19]

@WendyN2 You had mentioned the instructions: "On the screen, Enter the Box 17 Info, enter code AC and the dollar amount and click Continue."

The problem is I don't know what to use as the dollar amount. There is no total in the extra information I have about the Code AC details. The only information I have is Gross Receipts for 2017, 2018 and 2019 which each have a Shareholder Amount.

So which of these options is the correct way to come up with the number to enter in the box?

1. Add all 3 Shareholder Amount numbers up?
2. Use the 2019 Shareholder Amount number?
3. Average the 3 Shareholder Amounts?

Any help here would be great.

[WendyN2]

For your 2019 return, you would enter the "current year" Shareholder Amount number which for your situation would be the 2019 amount. My apologies as I could see from reading that there was a bit of miscommunication - I was hoping you'd clarify for me so I could better assist you! Do make sure that this amount is not also listed within the "Income" section of the K-1 as sometimes (more often than you'd think) the preparer of the K-1 will also put this income information in the "Other" section (box 17) not realizing that the reader does not know to then exclude the amount from their entry information. Just check to make sure.