I need to enter California adjustments for K-1 entries. I've received the corresponding state-specific form from the partnership. TT has the place for these adjustments. But then it complains when I enter the numbers there!
Specifically, when I enter in Form 565 Schedule K-1 Worksheet Line 2 (Net income from rental real estate...) col (d) (California Amount, if Different) a different amount, as specified in the document I got, it says "Line 2 col d should not have an amount. Use 'delete' to remove the entry". What?? Where else would I add that amount?
Same comes up in the check at the end, multiple times.
How do I enter the proper CA amount?
Turns out the issue had to do with two types of income reported in that K-1 (active and passive), but only for the state. The error messaging is poor, so it was hard to find the real cause. The partnership is passive real estate activity, and adding a different number for CA is fine as long as the additional "active" income is not added. That one, it says, contradicts the type of activity, and it starts issuing errors on both adjustments.
Apparently, this is an incorrect/artificial restriction by TT on partnership not being able to generate different types of income. Clearly, it's possible in reality, but TT forces you only choose real estate or business, but not both (and therefore an entry in line 1 or 2, but not both).
The proposed solution was to add a copy of K-1 in Federal, with type of activity "business" and no entry in income there. Then the corresponding form in CA could have the specified adjusted value.
This worked out fine. I hope this won't cause trouble down the road, as the two copies of K-1 could be confusing.
Turns out the issue had to do with two types of income reported in that K-1 (active and passive), but only for the state. The error messaging is poor, so it was hard to find the real cause. The partnership is passive real estate activity, and adding a different number for CA is fine as long as the additional "active" income is not added. That one, it says, contradicts the type of activity, and it starts issuing errors on both adjustments.
Apparently, this is an incorrect/artificial restriction by TT on partnership not being able to generate different types of income. Clearly, it's possible in reality, but TT forces you only choose real estate or business, but not both (and therefore an entry in line 1 or 2, but not both).
The proposed solution was to add a copy of K-1 in Federal, with type of activity "business" and no entry in income there. Then the corresponding form in CA could have the specified adjusted value.
This worked out fine. I hope this won't cause trouble down the road, as the two copies of K-1 could be confusing.