K-1 Excess Deduction on 1040

[NathanG8]

I have a Schedule K-1 form his year with an amount in Box 11A (final year deductions). The 2020 K-1 instructions state:

"you may deduct the excess deductions shown in box 11, code A, as an adjustment to income. Report this amount as a write-in on Schedule 1 (Form 1040), Part II, line 22. On the dotted line next to line 22, enter the amount of the expense using the code “ED67(e)”. Include the expense in the total amount reported on line 22"

But after I completed the K-1 in TurboTax in the income section, I did not see any change to my itemized deductions or expected refund. Is there any way to accomplish the change to the 1040 in the software?

[tagteam · Accepted solution]

You have to read the final regulations (link below) which are somewhat obtuse and involved.

Regardless, there is really no way to enter the figure from 11A in an online version of TurboTax as per the instructions you mentioned in your post. Rather, you would need to use a desktop version of TurboTax for that purpose.

https://www.govinfo.gov/content/pkg/FR-2020-10-19/pdf/2020-21162.pdf

[NathanG8]

I also found this, from the fiduciary's instructions for filling out section 11A:

"Box 11, Code A—Excess Deductions on Termination -Section 67(e) Expenses
If this is the final return of the estate or trust, and there are excess deductions on termination (see the instructions for line 23), enter the beneficiary's share of excess deductions for section 67(e) expenses (amounts allowed in arriving at adjusted gross income) in box 11, using code A. See Final Regulations-TD9918, for examples of allowable excess deductions on termination of an estate or trust."

[NathanG8]

Thanks, Tagteam. Does using the desktop version and entering this manually mean that I would need to file via paper and not electronically?

[tagteam]

Yes, if you have to do an override.

[NathanG8]

Thanks again! To your knowledge, is it likely that following the "On the dotted line next to line 22, enter the amount of the expense using the code 'ED67(e)'. Include the expense in the total amount reported on line 22" instruction (assuming I determine that I'm eligible to do so) will require an override?

[tagteam]

@NathanG8 

You should be able to enter the figure in Forms Mode on the 1020/1040R Worksheet (see screenshot).

[BillGa]

I am having the same problem with my 2020 Return.  Turbotax Desktop Software is not populating nor allowing me to override Form 1040 Schedule 1 Line 22 for an Adjustment to Income for the Excess Deductions Amount entered on the K-1 Worksheet (Line 11, Code A).  I am totally frustrated.  Does Turbotax need to update the 2020 software since this IRS guidance was released on 9/21/20120?  Also why will they not allow me to override on the Forms View so that I can simple enter the # myself.  How do I get someone from Turbotax to engage with a communication with me on this matter?

[tagteam]

@BillGa There is a screenshot in the post directly above your post. I will post it again below. Enter your figure on the worksheet.

[BR45]

If I enter the ED67(e) on the 'Other Adjustments to Income' smart worksheet, line H, can I file electronically?  It looks like it worked and Schedule 1 looks good.  

So, I think it is not an override since this is what the instructions from the federal government says to do.

So, can we file electronically now that it worked?

And I am a little disappointed in Turbotax for not making this easier when you fill out the schedule K-1.  They need to fix schedule K-1 so it works properly.

Thank you

[tagteam]

@BR45 

You can e-file, in almost all instances, provided there are no red-highlighted figures or entries on your forms and schedules.

Entering a figure on a worksheet, as you did, should not preclude your ability to e-file.

[BR45]

Great, thank you.  Do you know if the 67(e)  only for federal income taxes or can it be applied to state taxes as well?  So confusing!  I live in DE and cannot figure out if I need to back out the expenses from my income.