1065 K-1 Partnerships L13 - Other deductions W - 754 Depreciation Not taking

[lindatlee]

In previous years, I could post the "W" Other deductions 754 Depreciation in the supplemental Info Smart Sheet and also on in the drop down box on Line 13 Code "W" Other deductions.  This year I can still enter this information on the supplemental Info Smart sheet, but for some reason, something is blocking me from posting it to Line item 13.  Why is it doing that?  Are there new criteria that would disallowed the deduction?  Is that a software glitch or do I override and just put it in?    Looking for a faster way to resolve this instead of trying to go through each linking form.  

Kind of puzzled, Linda

[PatriciaV]

The Schedule K-1 codes have changed for tax year 2023. The entry for Section 754 depreciation can be found on Form 1065 p5-6 under Line 13(e)(C). Use code ZZ from the drop-down menu. What you enter here will also appear at the bottom of Line 13 under Type.

[lindatlee]

Thanks so much for the info.  I see where you put that.  Your suggestion appears to affect all of the partnership.  My brother and spouse (2 separate individuals) passed away in 2020.  So the 754 depreciation only applies to them, not the whole partnership.  Is there a way to isolate just these 2 getting the 754?  Or does that mean I have to manually override to partners with no 754 (change the net income and override to no 754 dep ) and those partners with 754 credit (change the net income and override the 754 to reflect the correct 754 deduction.   Does that mean  Should this 754 entry equal the amount posted on 10b on page 1065-1-4.  Does that make sense?  

[PatriciaV]

Yes, you can split the expense from Form 1065 Line 13(e)(C) using a Special Allocation by percentage or by amount with an allocation code on the same line where you entered the 754 depreciation.

1. First, confirm that "Makes Special Allocations" is listed as Yes under Business Info >> About Your Business.
2. Go to Partner/Member Information and click Done at the bottom of the Member Summary page.
3. Continue to the page "How to Enter Special Allocations" and click "See Demo" at the bottom.
4. Follow the example for Special Allocation by Percentage.
5. To confirm the allocations, open Statement A (Page 1) for each partner to see how Line 13 is being allocated.

[lindatlee]

Unfortunately, the demo and its instructions are not clear.  The instructions are based on adding a new k-1 partnership.  I have already established the K-1.  When I go to the existing partner's K-1, I list the the special allocation amount, but there is no field to enter the "SA" code.  and that amount doesn't flow into anything.  In order to balance with the special allocation amount in my overall K-1 worksheet,  I have to manually put in the respective partner's Statement A summary, (as listed on 10b), the amount of the allocation or else I'm out of balance on my 1065  Statement A summary.  And the amount of the special allocation is still not applied to the partner's K-1?  The information again, is only displayed in the Statement A summary.  What else am I missing?  If an when we find what is missing, should I be looking at a deduction in Line 13 with a zz code?  Is there someone who can actually talk to me and contact me to resolve this?  

[PatriciaV]

As long as your partnership agreement allows special allocations, you can add them at any time. Once you have set up the special allocation per the demo:

1. Open your return in TurboTax Business and click on the Forms icon in the header.
2. Find 1065 p5-6 Schedule K in the forms list and click the form name to open it in the large window.
3. Scroll down to Line 13(e)(D). 
4. Use the drop-down menu in the small box and choose code ZZ. 
5. Enter the total amount to allocate on the amount line. 
6. Enter the special allocation code in the box to the right. 

This will allocate the amount to all partners according to the special allocation you set up as described above.