I’ve looked at the K-1 you sent me and the question and answer that you included from the Turbo Tax Forum. I normally think that the easiest solution is the best and I think this matter is not as complicated as the answer you received seems to indicate. The issue is that the $13,154 included in Box 11, Code I is all ordinary income from a trade or business activity. Therefore, in my opinion, it should all be included on Schedule E, page 2, line 28 in column k as nonpassive income. This follows the instructions for Box 11, Code I on statement 2 of the supplemental information provided with the K-1. I don’t think that the 6 items that make up the $13,154 need any separate reporting on the 1040. The reason is that since these are components of ordinary income from a trade or business activity they do not have to be reported separately as interest income or foreign currency gain, etc. The “trade or business” character of these items overrides any other character of the items. I would just report the total of $13,154 on E, page 2. Since this causes the total to be reported as ordinary income, which is taxed at the highest rate, the IRS should not have any issue with it being reported this way. I have attached a document showing how I would include these items on the input sheets in ProSeries. I think you already know that the $650 needs to go on Schedule B and the -$42,735 and $41,095 need to go on D per the K-1 supplemental instructions, so the only issue—if I interpreted your question correctly—is the $13,154. I hope this helps.
