K-1 Small Business Exemption (Box 20 Code ZZ)

[dbooksta]

I have a K-1 from an LP that lists an amount in Box 20, code ZZ, with the description "Small Business Exemption."  Where should I enter that amount to get the exemption applied to my taxes?

[Mike9241 · Accepted solution]

not used for anything

the SBE

$25 million or less

$25 million or less
The small business exception is a provision in the Internal Revenue Code that allows small businesses with average annual gross receipts of $25 million or less to use the cash method of accounting and avoid some of the more complex tax rules. The $25 million threshold is indexed for inflation and applies to the three-year average of gross receipts. The exception is not available to tax shelters. The exception was introduced by the Tax Cuts and Jobs Act of 20174

all this means is that your k-1 used the cash method of accounting. if affects nothing on your return