Schedule K-1 Box 13, Code W

If you take a close look at the list, it probably belongs in the category of "Miscellaneous Itemized Deductions" which, essentially, have been eliminated by tax reform (TCJA).

Thank you for the response!

I appreciate your time.

My K-1 has a value in Box 13, Code W- Other Deductions, of $89.  Support statements says for individual taxpayers, certain IRC Section 212 portfolio deductions were previously deductible, but the deductiblity has been suspended.  Do I enter (0) on my Turbo Tax for this Box 13 instead of $89?

No - Enter the amount for Box 13 with Code W as it appears on the K-1.  After the entry screen you will a screen asking for details of the expense.

But, even after entering it exactly as you say, nothing shows up in the return? Why is that?

@ikibkilam 

If the line item represents miscellaneous itemized deductions (which is likely), those deductions were eliminated by tax reform (the TCJA) and will not appear anywhere.

@Anonymous_ - I'm in a similar situation. Received a schedule K-1 from a Master Limited Partnership (MLP) with a W code in box 13. The W has an asterisk after it, the related footnote of which states, "See attached statement for additional information." The statement in turns states the below. Since I am an individual, I assume the stated amount is non-deductible. Could confirm that is correct, and if so, explain which option to select on the related TT screen (see screenshot below)?

"The Portfolio Deductions from investing activities, if any, are non-deductible for certain taxpayers, including individuals, and would reduce your tax basis in the partnership. Please consult your tax advisor."

It depends on the deduction. Since this is related to  a portfolio investment, it may be related to investment expenses that can be claimed as a miscellaneous itemized deduction.  If from a Real Estate portfolio, it could be a Nonpassive Deduction to reported in Schedule E.

Look at those statements a little more thoroughly but you may wish to contact the broker for further details.  

@Anonymous

I agree and if they are miscellaneous itemized deductions, they are no longer deductible after tax reform (the TCJA).

@DaveF1006 - thanks. I did contact the company that generated the K-1 (namely, PWC that does it on behalf of the broker (Robinhood) and/or MLP) and they pointed me to TT's customer support for clarification :(...

@Anonymous_ - you agree with what? Contacting the broker for clarification? If so, see above.

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@Anonymous wrote:

@Anonymous_ - you agree with what? Contacting the broker for clarification? If so, see above.

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With @DaveF1006; it is either a miscellaneous itemized deduction (which you cannot take) or a nonpassive deduction. Either way, it will likely make zero difference in your return.

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@Anonymous_ wrote:

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@Anonymous wrote:

@Anonymous_ - you agree with what? Contacting the broker for clarification? If so, see above.

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With @DaveF1006; it is either a miscellaneous itemized deduction (which you cannot take) or a nonpassive deduction. Either way, it will likely make zero difference in your return.

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Got it, thanks. I was hoping there was just something I was missing. I can't stand it when tax stuff is ambiguous...

I have a K-1 from an investment partnership which qualifies as a Trader for tax purposes, so these expenses should be deductible.  Does anyone know which option to select in TurboTax to make it show up as a deduction somewhere?  I've tried "I have Another Description Item" and "Miscellaneous Itemized Deductions", but neither works.  Thank you.  

there are many types of items that are reported on 13W so what are they? are you a general partner or a limited partner? do uo actively participate in te trading activities?

Thank you very much for your response.  I'm a limited partner, although most of the income/expense for this year is due to carried interest allocated to me by the GP.  I'm actively involved in the trading business.  The largest items are "Trader deductions at Fund level" and "other nonportfolio deductions".  

I know they're meant to be deductible, but I'm not certain whether they should go on Schedule A or Schedule C (I am not the business owner) or where I should enter them so that TurboTax recognizes them as deductions.  

 A trader fund generally treats fund expenses, such as management and professional fees, as ordinary business deductions under section 162. In contrast, an investor fund generally treats these expenses as miscellaneous itemized deductions under section 212.

i am also confused by this phrase "most of the income/expense for this year is due to carried interest allocated to me by the GP". 

as I understand the term that's a specific allocation to the GP as a performance fee for achieving a minimum return as specified in the partnership agreement, so why it would be allocated to you is unknown.

so this is my opinion but others might differ on this 

as a limited partner you would be treated as an investor regardless of the fact that you are a trader.

if they were meant to be business expenses under IRC 162, I would think they would have been included on line 1 of part III rather than 13W.  in TurboTax  as you are going thru the interview process you need to check of box 13. then you'll come to a screen that says "enter box 13 info" with dropdown boxes.  this is where you select w and enter the total. then continue. then you come to another screen that says "enter code W detail"

you'll have to check off the boxes that apply. I can't tell you which. "Other misc deductions" refers to the old 2% of AGI deductions which are no longer deductible for federal purposes. if you use "I have another description" Turbotax requires them to be entered here and re-entered on whatever form they should be reported on.  

I would suggest contacting the GP to see if they'll provide more guidance. Some partnerships include a supplemental statement or schedule about how to treat certain line items. 

My preparer put in code W for box 13 for property taxes paid on a partnership.  

Then the actual property taxes are listed on another form which flows to the schedule A

Now that the code W has been changed to code Z, 'itemized deductions' I am confused

thoughts?  

The IRS made significant changes in Schedule K-1 for tax year 2023, adding dozens of new codes for several boxes. On Form 1065 Schedule K-1, Box 13 codes were expanded. Code W is no longer used for itemized deductions. Instead, these deductions are reported under Code Z. 

When you made an entry for Box 13, Code Z, the program transferred the amount to the appropriate line on Schedule A under Taxes You Paid, usually Line 6.

@Redheather

I have similar but slightly different issue. The value of 13W is PORTFOLIO DEDUCTIONS, and is negative. Even after I entered in K1 form, I did not see any entry in tax report form.

Am I supposed to report it as an income manually? 

Form 1065 Schedule K-1 Box 13 W is for Soil and water conservation. However, Code L is for portfolio deductions, which should be reported on Form 1040 Schedule A Line 16 (Other Itemized Deductions).

You might check with the partnership that sent you the K-1 to confirm which code is correct. They may also provide guidance on where the amount should be reported on your personal 1040 return.

@Jason202104

I found this in the instructions for K-1 1065...another code:      

Code Z. Itemized deductions. Itemized deductions that
Form 1040 or 1040-SR filers report on Schedule A (Form 1040)

My deductions are property taxes paid which I want to put on the schedule A.

thank you for your response

I am not 100 % sure if I am answering this correctly for you, but what I have had to do  with my k-1 deductions other than entering them on the k-1, is enter them on the Additional Info for K-1s worksheet which I think flows to the Tax & interest worksheet and one of these flows to the schedule A.  I have to 'work' it to get it to do what I want--it's all legal and I am not cheating, but I've learned to work the program to get what I want.  I have called turbo tax every year to ask them to get a 1065, K-1 program for Mac--like they have for PC's .