K-1

tjmskm — Fri, 07 Feb 2020 03:38:20 GMT

I have a K-1 from for an estate. Box 11 has a final year deduction amount listed for Code A and C. Code A has an asterisk with explanation of "Allowable Excess Deductions on Termination." I have entered this data, but cannot find a space on my return where it applies the deduction. The Form 1041 Schedule K-1 Worksheet, Section Income and Loss Reported on Schedule E, Supplemental Income or Loss shows Code A and the estate name, but columns for Loss K-1 or Income K-1 under headings of "Passive Income and Loss" and "Nonpassive Income and Loss." It seems as though I am missing out on a potential sizable deduction. Have I missed an entry somewhere?

Re: K-1

Anonymous_ — Fri, 07 Feb 2020 03:50:02 GMT

@tjmskm wrote:

...Have I missed an entry somewhere?

You are not doing anything wrong nor have you missed an entry.

Absent unusual circumstances, final year deductions on termination (Excess deductions listed on Line 11 with an "A" code) are treated as miscellaneous itemized deductions on an individual income tax return and, as such, are routed to Schedule A. The issue with that is tax reform (the TCJA) has virtually eliminated miscellaneous itemized deductions so the figure you have on Line 11 ("A" code) is no longer deductible.

See https://www.irs.gov/publications/p529

You can (and probably should) check with the executor, administrator, or anyone else authorized to act on behalf of the estate to ensure that those final year deductions have been accurately reported.

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K-1

Re: K-1