Tax-exempt amount does not equal the total entered on Schedule K-1?

[KathrynG3]

If you are seeing a tax-exempt total in the income area, the total entered on Schedule K-1 may be combining with input from other Schedule K-1's, or Interest or Dividends that were reported separately.

Please reply to this post if the issue is still unresolved.

@carcox71

[jh123]

I am experiencing the error where the Tax Exempt amount does not equal the amount entered on Schedule K-1 error.  In short the error is still unresolved.

[KathrynG3]

Ok. It would be helpful to have a TurboTax ".tax2019" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions:

For TurboTax Online:

• From the left menu, click Tax Tools>
• Tools>
• Share my file with agent click send
• There will be a pop-up with a token number

For TurboTax Desktop:

• On your menu bar at the very top, click "Online">
• Send Tax File to Agent click send
• The pop-up will have a token number

I'll be able to open TurboTax with your numbers but not your personal information. That may help diagnose the issue. 

[pricescott99]

did this ever get resolved?  because I'm having the same problem.

[pricescott99]

Anyone?? Anyone at all able to resolve this? 

[DavidS127]

More information may help resolve your issue.  For example, what entries were made from your Schedule K-1 for tax-exempt interest (boxes, codes, amounts); and, what error message did you receive and when did you get that error message?

[pricescott99]

I entered all the information that was on my K-1.  The problem seems to be with the entry in Box 18.  From the K-1, I entered code "C" and $31.00.  The prompt I get from Turbotax is exactly the same one that's in the subject line of this thread: "Tax-exempt amount does not equal the total entered on Schedule K-1."  Doesn't seem to matter how many times I re-enter the K-1 info, I get the same problem.

Thanks for your help.

[DavidS127]

The code C for box 18 designates this $31 as "nondeductible expenses paid or incurred by the partnership....not deductible on your tax return. Decrease the adjusted basis of your interest in the partnership by this amount".  So, not sure why it is causing a "tax-exempt" error, except that box 18 codes A and B related to tax exempt income.

I recommend two things.  First, try entering the code C and amount on the third line of that schedule on the box 18 page.  If that doesn't work, try leaving the $31 box 18 code C amount off the K-1 entry.  It is not deductible on your return, and as long as you take it into account for your adjusted basis calculations, you don't need it for your tax return calculations.

See the IRS Instructions for box 18 of Form 1065 Schedule K-1 at this link.

[pricescott99]

OK, I' looked a little further.  Under the error prompt, there's a box where I can scroll through a virtual K-1 with the information I entered.  Even though I have re-entered code"C" in box 18 about three times now, in the virtual K-1 in TurboTax, it says Code "A."  And for some reason, there is no Box 19 in the TurboTax virtual K-1 (where I DID enter Code "A"). It appears to be a bug in the software.

I suppose I could just change the Code "A" I entered in Box 19 to Code "C" and see if that solves it.  But itt'll be wrong.

[jchildress]

I have the exact same issue...  

[pricescott99]

Thanks for your help.  I went back and deleted the K-1 I had entered, then re-entered it all again, and for whatever reason, it worked this time.

[jchildress]

Thanks.. that worked for me too.  Deleting and re-adding...

[DavidS127]

The "delete and re-enter" technique was a good idea.  That often works when "for whatever reason" the form is not doing what it is supposed to do.

[Redheather]

I cannot get my head around why a non deductible expense, box 18 code C on K-1 decreases adjusted basis.  For example, on a 1065 for bare land, is keeping the fire danger down by keeping the weeds cleaned up (hiring someone) .  I don't plan to take the expenses off anywhere...just a cost of maintaining the bare land in a state with lots of fires.  Why would the decrease my basis in the bare land which increase my profit when I sell it?  whoops..hmmmm. ..have I just said the answer?  Thanks for letting me reach out TT helpers!