Using Code AH rather than Code Z on Box 20 of the Schedule K-1 has significant and negative tax consequences. TurboTax will not apply the deduction you should get from your tax due with code AH. So you MUST enter Code Z amounts under Code Z.
NOTE: TurboTax needs to fix this. The person that placed the question to David spent a LOT of time solving this. His post said many hours, 5 expert TurboTax experts and three days later he had the solution! And what makes this really sad was he was a Tax Consultant that uses TurboTax.
Here is the solution I found with a Google search that worked for me. This is copied from the post verbatim
Employee Tax Expert DavidS127
Employee Tax Expert
March 6, 2020 12:00 PM
11
Enter the code Z when you enter the K-1 box 20, but you don't need to enter an amount. Keep going through the K-1 interview, and there is a screen near the end of the interview titled "We need some more information about your 199A income or loss". That screen will have a place to "check off" the items you have, and enter an amount for each one. This screen must be completed in order for your box 20 code Z information to be correctly input into TurboTax.
To get back to the K-1 summary screen and find the Schedule K-1 to edit, click the "magnifying glass Search" icon on the top row, enter "k-1" in the search window and press return or enter, and then click on the "Jump to k-1" link to find the K-1 you need to edit.
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