government obligations

[rbt1219]

I am the managing member of a LLC that owns rental property. The LLC tax return is reported on form 1065, with K1s distributed to LLC members. Rent is paid to a brokerage account that sweeps cash into government money fund, 33% of the dividends from which are government obligations. Interest and dividends are exempt from taxation in my state. How do I indicate on the1065 return that the 1/3 of dividends are tax-exempt?

[AmyC · Accepted solution]

Follow the prompts in the program when you enter the income. It will ask about exempt income and you can enter it.

About Form 1065, U.S. Return of Partnership Income states: Report tax-exempt interest income, including exempt-interest dividends received as a shareholder in a mutual fund or other RIC, on Schedule K, line 18a, and in box 18 of Schedule K-1 using code A.