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I have a couple of K-1's which reported some gains in Part III box 2 and also a little bit interest income in Part III box 5. The interest income gets reported in Schedule B and also in NJ-Bus-2. It gets taxed once for interest and gets taxed second time at 50% in NJ-Bus-2. Is there a way to adjust this so it will only be taxed once?
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No. Your income is taxed at the federal level and then taxed again by New Jersey.
Thanks Robert. I understand it will be taxed at both Federal and NJ level. However, in NJ return, the K-1 interest incomes from Box 5 of K-1 Part III are already included in Line 16a Taxable Interest Income. However, the K-1 interest incomes are included on Line 21 Distributive Share of Partnership Income (adding up Boxes 2 and 5 from K-1 Part III). This is automatically done by Turbotax, why is the interest incomes, however little they are, are added to both Line 16a and Line 21? Is this correct?
there may be a bug in Turbotax. the instructions say
Do not include on line 16a:
• Interest that was earned and paid to a sole proprietorship,
a partnership, or an S corporation. Report on Schedule
NJ-BUS-1.
[MODS]
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