Error in K1P Addl Info 1 form
Outside Expense: Interest Paid, Line 2
- This amount is *incorrectly* added to the partnership total income in Schedule E, P2, Line 28, column k.
- This amount is applied correctly to Schedule E, P2 creating a new line item in Line 28, column i
- The result is that this negates the deduction this amount should provide.
For instance, say my income from my K-1 is $20,000, reported in Schedule E, P2, Line 28, column k.
- When I enter the $2,000 interest paid into K1P Addl Info 1 form, Outside Expense: Interest Paid, Line 2, the "Income K-1" in Schedule E, P2, Line 28, column k then incorrectly increases to $22,000 from $20,000.
- The additional line item is added and the "Loss K-1" correctly shows $2,000, as expected.
- The Totals in Schedule E, P2, Line 29 should contain $18,000, but it incorrectly contains $20,000 - which was the original amount of income without adjusting for the loss.
- The effect of this error is that I lose a $440 tax refund for the $2,000 loss.
