Schedule K-1 Box 20 has 20Z1 entry in Supplemental Information rather than code Z

[njarwala]

Hello, 

I have received a K-1 from a PTP which has a loss in Box 1 and entries in Box 20. In addition, in a Supplemental Information Schedule, it has a number of 20XXX Codes with Description and Amt. One in particular is confusing me - a 20Z1, Section 199A PTP income, with a negative (loss) amt - the same amt as in Box 1. 

Now a regular Box 20 Z code is Section 199 info required for QBI deduction. In this case the supplemental info has a code 20Z1. Also, there is no Statement A which normally provides Section 199A detail.   

My understanding is that since it is a loss, it is simply reporting that the entire loss is Section 199A related and, while there is no QBI deduction, I may need to net this with some other Section 199A income to calculate the QBI deduction if any.  As such, if I do not have any other positive Section 199 income the passive loss simply carried forward to a future year.Is this correct?? Is there any need to enter this anywhere with TT? Thank you.

[PatriciaV]

Yes, you are correct. If this Section 199A information does not influence any other areas of your return, the entry may not be necessary.

However, you may wish to contact the company that sent you the PTP Schedule K-1 to clarify why there was no supplemental information for Schedule A, as required by the IRS rules (Box 20 Code Z Section 199A). If the loss was reported for Box 20 Code Z, the additional information should have been provided. (Note that there is no code "Z1" - numbers often follow box numbers if there is more than one entry for that code.)

[njarwala]

Thank you PatriciaV. 

One thing I should have been more clear about  the code 20Z1. It was not part of the main K-1. The K-1, Box 20 did have three codes (A, N, and V). The 20Z1 (together with 20AH1, 20AH2... etc) were part of another doc labelled "Supplemental Information Schedule".  The 20AH1, etc., codes were related to UBTI, etc., that do not apply to my situation. As such, my assumption was that the 20Z1 was also for information - in case I needed to use the Section 199A loss. 

I did contact the company to ask about Schedule A. Unfortunately the rep I reached did not know. I will try again and hopefully reach someone who can help.

Thanks again.

[PatriciaV · Accepted solution]

Sounds like that truly was supplemental information, optional for your use if needed. If you reach a knowledgeable person at the PTP, ask why they reported the information as Code Z1. Was that loss included somewhere else on the K-1? While they may not be able to advise you how to use the loss, they should be able to explain where the loss came from.

[njarwala]

Will do, PatriciaV.

One item that may be a clue re where the loss came from is that the negative amount associated with the 20Z1 code in the supplement is exactly the same as the negative amount in Box 1 - Ordinary Business Income (Loss).  I interpreted this to mean that the entire business loss qualifies for Section 199A treatment. Since it is a passive loss and can be only be netted against a future positive income from the same PTP (or until I dispose off the investment), there is not much I can do with it within this return, but useful for future.

Thanks again for all your help!