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

[claudemundy]

I can't get my head around it either, but that's right out of the IRS Instructions for Schedule K-1 (Form 1065). For box 18, it says "Code C. Nondeductible expenses. The nondeductible expenses paid or incurred by the partnership are not deductible on your tax return. Decrease the adjusted basis of your interest in the partnership by this amount."  

[Joanne41]

I have spent hours trying to finish this return

The tax exempt amount does not equal the total entered on Schedule K-1 message keeps appearing

[Joanne41]

Well how would I determine what numbers are being used.  And if you already have all of these numbers, why doesn't the program just enter them?

[Joanne41]

The K-I that this refers to only has a $1 nondeductible expense, but eliminating it does nothing.  Is this connected to my other K-1?

[Joanne41]

Can you tell me what lines to change?

[PatriciaV]

Try deleting that Schedule K-1 and re-entering the information again. If that doesn't fix the problem, delete the K-1 and re-enter without the non-deductible expenses. That amount has no affect on your taxable income, so it's not a required entry.

[hblsmi]

I have deleted and recreated the partnership K-1 in TurboTax.   This resulted in no changes.

The issue is not regarding the non deductible expense.

The issue is that this non deductible expense in Box 18 code C should be decreased from the cost basis of the asset, which Turbo Tax does not do.  This appears to be a defect with the software.

The result is that the cost basis calculated in TurboTax is not equal to the cost basis reported on Form 1065 Schedule K-1 Box L (Partner's Capital Account Analysis) , "Current year net income(loss)"

Is there any way to manually modify a form to get around this?

I have spent hours trying to get around this software defect.

So far the only way I can get around this is to artificially reduce my "Ordinary business income(loss)", which does not match what is on the Schedule K-1.

This is not a good solution.

[tmartinbell]

So I resolved this issue today 4/10/2025

Go back to your K-1 entry for Box 18
For Box 18 once you enter all the info from the K-1, the next screen asks to list the state that paid the (keyword) tax-exempt interest income.  Only enter the State and amount for code A. Don't enter anything else.
This will clear up the error. 
It doesn't want the state for any other codes, just A. 

I had A, B, and C with amounts. The next Screen only enter the state and the amount. 

Code B and C are not Tax-exempt interest income amounts.

B is tax-exempt income - this is different from tax exempt interest income