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Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Correct, but the instructions for Schedule A, Line 16 do not.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i1040sca#idm140545382987696">https://www.irs.gov/instructions/i1040...>
sgove6
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

True; however, if you scroll to the bottom of the page you will see the following: "Page Last Reviewed or Updated: 28-Dec-2018". Do the same for the Instructions for Schedule K-1 (Form 1041) web page (<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i1041sk1">https://www.irs.gov/instructions/i1041sk1</a>) and you get this: "Page Last Reviewed or Updated: 06-Mar-2019".
Would it be helpful if the IRS were to go back and update the Schedule A instructions to reflect this new information? Absolutely... and why they haven't yet is a mystery at best.

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

We can go back and forth about this into perpetuity. I'm just going to add the following, which should be obvious.

If you take the deduction, you take your chances. More likely than not, an issue will not be raised by the IRS (i.e., the deduction will either slip through unnoticed or they will accept the deduction as valid).

If, however, the deduction is challenged, then your only recourse would be to (a) pay the assessment (including any interest/penalty) or (b) proceed through the appeals process and, if unsuccessful, proceed to court. Option b is completely ridiculous considering the appeals process would involve more time/money than the deduction is worth.

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

I don't think there's any doubt that the excess deductions are allowable. The i1041sk1 instruction is very clear on this. The Schedule A instruction only says "Miscellaneous" deductions are not allowed and excess deductions are not miscellaneous deductions. I agree with your assessment of how the IRS might react (the IRS will do what it's going to do) but if they do challenge it, I'd think a simple letter highlighting the  i1041sk1 instruction will clarify things.  

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Hopefully, that will happen. However, they can always return fire by citing the Schedule A instructions for Line 16.

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Well who doesn't enjoy a good fight with the IRS.
GAW61
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Is there anyway to get an answer from TurboTax as towhy there software will not properly account for this?

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

It is almost certainly this......from the instructions for Schedule A:


Only the expenses listed next can be deducted on line 16. For more information about each of these expenses, see Pub. 529.

Gambling losses (gambling losses include, but aren't limited to, the cost of non-winning bingo, lottery, and raffle tickets), but only to the extent of gambling winnings reported on Schedule 1 (Form 1040), line 21.

Casualty and theft losses of income-producing property from Form 4684, lines 32 and 38b, or Form 4797, line 18a.
Loss from other activities from Schedule K-1 (Form 1065-B), box 2.

Federal estate tax on income in respect of a decedent.

A deduction for amortizable bond premium (for example, a deduction allowed for a bond premium carryforward or a deduction for amortizable bond premium on bonds acquired before October 23, 1986).

An ordinary loss attributable to a contingent payment debt instrument or an inflation-indexed debt instrument (for example, a Treasury Inflation-Protected Security).

Deduction for repayment of amounts under a claim of right if over $3,000. See Pub. 525 for details.
Certain unrecovered investment in a pension.

Impairment-related work expenses of a disabled person.
GAW61
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

If in fact irs is allowing this deduction we need to find out what TurboTax plans to do so we can complete our returns

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

@GAW61 if you haven't paid yet, see my reply to @sgove6 to a similar question in this TurboTax Community. (Basically I said I found a tax program, with the initials TS, that's handling the K1 box 11A deduction in accordance with the i1041sk1 instruction). In my case, I already paid for a desktop version of TaxAct so I'm not sure what I'm going to do. I can e-file by putting the 11A amount in box 10 instead (box 10 is for estate tax) and add an e-file note explaining what I did (then hope the IRS accepts it as is), or I can paper file (and would have to do that for my state taxes too) or I can pay more to e-file using TS online. I already filed four 1040 returns using TaxAct *where the 11A issue wasn't applicable) so I just about got my money's worth out of it. The problem I'd have going TS in the future is they don't make a version for Estates and Trusts yet (and I have 2 other Trusts I manage). I've used TurboTax for many years but I had an issue in 2016 so I switched to TaxAct which has had its own issues (including the one we're writing about here). I think most people would have just gone through the Q&A, clicked "eFile" and be done with their taxes. They'd  never know they missed a valuable deduction.
Sfg1
New Member

Using TurboTax Deluxe how do you enter excess Deductions on Final K-1of an estate . Should go on Beneficiaries 1040 Schedule A line 16

Is turbo tax supporting current rules? Changed in 2020. Deductible now!

 

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