Form 1065 Schedule K-1 Box 13 Code AE reports portfolio deductions, which were formerly deductible by individuals under section 67 subject to the 2% AGI floor. The partnership reports these deductions for partners who are not individuals, as they may be able to report the deductions.
In the case of a taxpayer filing Form 1040, the deduction is no longer allowed.
You have two choices:
- Return to the Schedule K-1 topic and delete the amount and the AE code for Box 13.
- Return to the Schedule K-1 topic and delete the amount for Code AE.
Run SmartCheck again. When prompted, enter the amount on Line 2 Other miscellaneous itemized deductions.
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