An income timing difference is entered on the Sch M-1 worksheet in the first section under Income Items. Enter the per Book income and the per Tax Return amount so TurboTax can calculate the difference. In your case, you want to reduce Tax income by the rent that was reported last year.
Entering the difference in this way will allow the adjustment to flow to Form 1064 p4-5 Sch M-1 Line 6 on a separate line under Tax-exempt interest with the description you entered above.
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