topic Re: K1 Box 20 Code Z Cannot Leave Blank in Get your taxes done using TurboTax

K1 Box 20 Code Z Cannot Leave Blank

btrav68 — Thu, 25 Mar 2021 22:17:27 GMT

Hey folks,

I am having issues with my K1 as I cannot seem to get the box 20 code z portion to take without error. I have read multiple posts and I am still confused on what to do here.

My K1 box 20 has code Z in it with "STMT" in the amount field. You cannot put "STMT" in there for TurboTax so I did as others suggested and left it blank and kept going. I do get additional questions and answer those appropriately, but still it fails the final check because I have entered code z with no value. I then added a value and it still fails...

I'd like to know exactly what to do here as I have seen that I should NOT just exclude the Z code information...

But it seems I cannot edit the underlying form directly and thus have to figure out the magic combo to get this right

Should I just continue even though it keeps asking me to check this value?

On 199A the values I need to enter are:

Net rental real estate income (loss) -895
Qualified property 37,125

Re: K1 Box 20 Code Z Cannot Leave Blank

btrav68 — Fri, 26 Mar 2021 12:33:27 GMT

The check error

Re: K1 Box 20 Code Z Cannot Leave Blank

ThomasM125 — Fri, 26 Mar 2021 03:19:13 GMT

Your need to go back through your K-1 entry and indicate you have an entry in box 20. When you get to the box 20 entry, choose code "Z - Section 199A information" and enter -895 in there as it represents the QBI rental loss amount as probably reported in box 2 on the K-1 schedule.

Re: K1 Box 20 Code Z Cannot Leave Blank

btrav68 — Fri, 26 Mar 2021 12:54:29 GMT

@ThomasM125

Thanks for your reply.

I deleted the K1 and started over. I did put -895 in box 20 but it still didn't take it.

What I discovered and in my opinion is poor implementation is that if you check the business income box on 199A form all the sudden more fields appear. After filling this in magic. Everything is good.

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Wed, 07 Apr 2021 23:56:30 GMT

Hello, I am having similar issues. I selected Box 20 Code Z, left it blank, and then included the information later on when prompted "we need some information about your 199A income. I input the numbers under Rental Income (Loss) and also UBIA of Qualified Property for this Business, same as you did. Turbotax accepts the inputs. However, when I go to Forms and check Form 8995 - Qualified Business Income Deduction (SImplified Computation), it is not reporting the rental loss I inlcued in Shcedule K1. Did you have similar issues? Any advise?

Re: K1 Box 20 Code Z Cannot Leave Blank

Irene2805 — Thu, 08 Apr 2021 13:02:41 GMT

Unless you selected Active or Material participation for the rental income (loss), it is considered passive, and the figure will not flow to Form 8995.

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Thu, 08 Apr 2021 14:39:44 GMT

Thanks for your reply. I had selected "Active Participation, but the numbers are not flowing to Form 8995. I took a look at Form 8552 and the loss is reported under Worksheet 3 for Passive Activities. It should be under "Rental Real Estate Activities with Active Participation". Any idea why?

Re: K1 Box 20 Code Z Cannot Leave Blank

JamesG1 — Thu, 08 Apr 2021 15:29:42 GMT

@btrav68

Perhaps you do not qualify for the Special Allowance for Rental Real Estate Activities. See here and click Special Allowance for Rental Real Estate down the left hand side.

Your original post concerns an issue with the screen Enter Box 20 info. Perhaps this will help.

At the screen Enter Box 20 info, you likely need to select code Z Section 199A information. Code Z tells the software that qualified business income information needs to be entered at the screen We need some information about your 199A income. Select Code Z and enter $0. Click Continue.

At the screen We need some information about your 199A income, you will likely need to enter the following information:

Ordinary rental (loss) from this business,
UBI of qualified property for this business.

Click the box for business income (loss) and enter the rental loss in the appropriate box.

Click the box for UBIA of qualified property and enter the value.

he Qualified Business Income Deduction was created by the 2017 Tax Cuts and Jobs Act (TCJA) and is in effect for tax years 2018 through 2025. See this TurboTax Help.

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Thu, 08 Apr 2021 15:52:07 GMT

Thanks! That is exactly the procedure I was using. However, the numbers do not flow through. I was playing around and noticed that if I leave empty the Box 2 - Rental Real Estate Income or Loss when the questions comes up, then the numbers flow through. Not sure how those two Box 2 and Code Z Section 199A are related.

It is important to indicate that a loss reported in Box 2, so not sure If I should leave it blank.

Appreciate your help!

Re: K1 Box 20 Code Z Cannot Leave Blank

JamesG1 — Thu, 08 Apr 2021 16:21:36 GMT

You should report the loss. The screen Enter Box 2 info reports, in your case, a loss to your tax return.

Other answers in other parts of the tax return will determine whether that loss will offset other income in your tax return or be carried over to next year as a passive loss. These are all issues related to taxable income.

The screen Enter Box 20 info asks you to select code Z Section 199A information. Code Z tells the software that qualified business income information needs to be entered at the screen We need some information about your 199A income. Select Code Z and enter $0. Click Continue.

When you enter information at the screen We need some information about your 199A income, the software is determining whether and how this income will affect the Qualified Business Income Deduction computations. Now we have moved away from taxable income to the the Qualified Business Income Deduction.

This individual entry is a loss but it could offset Qualified Business Income reported elsewhere in the tax return. If there is no other Qualified Business Income in the tax return, the loss is carried forward to offset Qualified Business Income in a subsequent year's tax return.

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Thu, 08 Apr 2021 16:51:36 GMT

That way none of my reported losses in Box 20 Code z follow through Form 8995. I guess Turbtotax is determining they are not applicable. Qualified Business Income or (loss) is calculated/reported as zero in Form 8995. There is no other Qualified Business Income in the tax Return. Per your comments, the loss would be carried forward to offset QBI in coming years. However, since the QBI (loss) is calculated as "zero", none of the losses are carried forward.

This is different to what was reported in previous returns prepared by an accountant, even though the forms (K1) and others are quite similar. In the return prepared by my accountant, all numbers from Box 20 Code Z were flowing through to Form 8995 and since deductions were not being used, they were carried forward.

Re: K1 Box 20 Code Z Cannot Leave Blank

DaveF1006 — Thu, 08 Apr 2021 19:50:29 GMT

It depends. You need to provide details about your Code Z transaction. To provide the details, you need to look at your supplementary statement that came with your K1. Here's how to edit.

Log into Turbo Tax if using Turbo Tax Online
Go to federal>wages and income>S-corps, Partnerships, and Trusts>show more
Schedule K1>revisit
Select update next to Partnerships/LLC's(form 1065)
Select edit next to the K1
Continue through the next couple of screens until you get to a screen that says Enter Box 20 Info. Press Continue
When you get to Box 20, enter the Z code from the drop-down but leave the amount blank. Press Continue
Make sure you select your information is at risk when you reach that screen
The next few screens will ask you specific information about your 199A income. All this information should be on the disclosure statement that came with your K-1.
Note: if you are using Turbo Tax software, you can select quick zoom at the bottom of the page where you entered Code Z in Box 20. That will also allow you to enter information from the disclosure statement

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Thu, 08 Apr 2021 21:09:52 GMT

@DaveF1006

Hi Dave! That is the procedure I am following. I read it in different posts from you in TT's website.

Still, the numbers from the Box 20 Code Z are not passing through the respective Form 8995 for example.

I've attached screenshots of the questionnaire and forms FYI. I was checking and the Box 2 loss amount is not reporting in Part I Rental Real State with Active Participation as was the case for last year, even though I replied I was active participant. Not sure if those two 8995 and 8582 are related.

Re: K1 Box 20 Code Z Cannot Leave Blank

DaveF1006 — Thu, 08 Apr 2021 21:24:36 GMT

It depends. To clarify, did you have passive loss carryovers from last year? According to this Turbo Tax link written by RobertG, "If the net overall QBI last year is less than zero, it is carried forward as a loss from a separate qualified business and will reduce any potential QBI deduction in the following year in 2020." So yes, depending on the circumstance, the 8995 and 8582 could be related.

Re: K1 Box 20 Code Z Cannot Leave Blank

fcabrales — Thu, 08 Apr 2021 22:02:18 GMT

@DaveF1006

Where do I check passive loss carryovers from last year? Form 8995 Line 3?

Still, none of the current Box 20 Code Z are showing up in the respective forms even though they are properly entered into the program. Not sure if this is a glitch or the actual loss becomes a QBI of zero.

Re: K1 Box 20 Code Z Cannot Leave Blank

DaveF1006 — Thu, 08 Apr 2021 22:44:04 GMT

Yes, in order to qualify for QBI, you would need to have net income for the year. if you suffered rental losses for the year without having offsetting income reported elsewhere, you will not be eligible for QBI. I apologize for missing this earlier.

Re: K1 Box 20 Code Z Cannot Leave Blank

Daniel92612 — Sun, 09 May 2021 01:23:14 GMT

Thank you. I've been trying for 4 hours to get this work !!!

Re: K1 Box 20 Code Z Cannot Leave Blank

Daffy2022 — Sun, 10 Apr 2022 00:47:14 GMT

Great tip btrav68, you were right that solved the issue, I completly overlooked that entry

Re: K1 Box 20 Code Z Cannot Leave Blank

EMIH — Fri, 17 Mar 2023 22:56:37 GMT

This is exactly the problem Im having!

I have no business income, just interest income in box 5, and a W in 13 with a statement. In box 20, I have an A - with the interest income and the dreaded "Z "with STMT written. On Statement A under "Other Deductions" I have a $ amount under other deductions, see ATT and Rental Deductions on the back with the amount. I keep getting an error message. Doesn't matter if I put a -730 or 0 when entering the box 20 info - it keeps giving me an error message about 199A income entered on statement A. I do not have a 199A or any income from this K1!!!

In going to the forms, I noticed that I do have REIT Div from some investments which have nothing to do with the K1, so I have checked the box "Only source 199A REIT Div, not business income.

I am unable to continue - been trying to figure this our for over a week now. Im tempted to just leave the "Z" off or try to send this through with an error message. HELP!!!

Re: K1 Box 20 Code Z Cannot Leave Blank

joann44 — Sat, 18 Mar 2023 00:17:32 GMT

If you havce a Code Z in box 20 then you absolutely do have 199A income. That's what the code means. You need the information from the statement to complete your return. You do NOT check the REIT box, you're going to need to find the information that pertains to your 199A income on the statement attached to your K-1 for Box 20