1065 K-1 Box 20 AJ Code

[PatriciaV]

Per the IRS Instructions for Schedule K-1 List of Codes and References Used in Schedule K-1 (Form 1065), Box 20 Code AJ is used for Excess business loss limitation. 

However, some partnerships choose to use this code to report Aggregate Business Activity Gross Income and Aggregate Business Activity Total Deductions, which together total Excess Business Losses for Form 461.

This information is relevant only if your tax year 2025 net losses from all businesses are more than $313,000 ($626,000 if filing a joint return). If this doesn't apply to you, you can leave Box 20 Code AJ blank (or do not include this code).

We don't anticipate future updates that would change how this code is handled in TurboTax.

See also: IRS Instructions for Form 461 - Limitations on Business Losses

@user17759351788 

[user17759351788]

I was provided with the 2 values: Aggregate Business Activity Gross Income and Aggregate Business Activity Total Deductions.

Is the field totaled by treating Deductions as a negative number?

[grandwave22]

It would be nice to have Form 461 available even if TurboTax doesn't complete it so a return doesn't need to be mailed in. The form needs to be included with filing if excess business losses apply.

[DaveF1006]

Yes, you should enter them as two separate line items under Code AJ. You would list these separately, also on Form 461.

1. Aggregate Gross Income: This is a positive number.
2. Aggregate Total Deductions: This is a negative number (or a number to be subtracted).

You would enter these as two separate entries in filing the K-1 but use the same AJ code when reporting.

@user17759351788 

[user17759351788]

@DaveF , @PatriciaV 

That seem very opposite to : "...which together total Excess Business Losses for Form 461."

So, enter as 2 line items, do NOT manually perform the math operation and enter a single value?

[PatriciaV]

The information for Box 20 Code AJ is reported separately to allow the partners to use the information as needed to complete Form 461. If you're not planning to file that form, you don't need to enter Code AJ. Or you can add the two numbers together. But TurboTax provides multiple lines for Code AJ to allow you to report each amount separately. Note that in most cases, TurboTax doesn't use the information from Box 20.

@user17759351788