Intangible Drilling Costs

[PatriciaV]

I'm unable to reproduce the form errors you mentioned. Entering the K-1 line items as listed generates Excess IDC of $3,186 (90% of total), but this has no effect on the loss reported on Schedule E p2. Please advise if you have a different experience, especially during SmartCheck.

[gyaqwe]

These steps are enormously useful. Thank you.

When I go thru those steps and enter the IDC amount for Box 13, let's say $37.5k, and choose that I want to amortize in a single (this) year, I do NOT see any reduction of my overall tax liability.

Do I need to take any other manual steps to make sure that IDC amount takes effect and reduces my AGI?

TIA!

-G

[c0nstant1ne]

I'm experiencing the same as @gyaqwe .

What I did:

- Entered the number in box 13 'other deductions'

- selected code J

- selected deduct this year instead of amortize

but I didn't see any deduction applied.

Is this a bug or I did it wrong?

One thing I noticed is that although I selected code J for box 13, the next screen shows CODE I:

[DaveF1006]

When you went through the interview, there is a question asking you if you materially participate in the venture. If you indicate you did not, you won't get credit for the deduction. 

This would be the first place i would look.

@c0nstant1ne 

[gyaqwe]

This was indeed the problem @DaveF1006 Thanks!. I assumed that the software knows that Working Interest in OnG is always non-passive. Well it doesn't. I had to select it while entering the data and then it took effect. @c0nstant1ne - see if that works for you.

-G

[c0nstant1ne]

Thanks @DaveF1006 for the suggestion. Glad that it worked for you @gyaqwe.

I just got back to finishing my tax return this weekend, but I don't think I was ever asked about whether I materially participated while entering the K-1. 

At which step this is asked? 

I'm using turbotax premier. I tried both the online version and desktop, neither asks this question.

Type of partner: General partner or LLC manager, Domestic

Your help is much appreciated.

[PatriciaV]

The question "Did You Participate?" appears after the page "Choose Type of Activity" where you check one of Box 1, 2, or 3. This has been tested in TurboTax Online and Desktop.

@c0nstant1ne 

[c0nstant1ne]

Hi Patricia,

Thanks for the reply.

Box 1,2,3 are empty on my K-1 and I had to select ‘other’ based on the instructions, and it didn’t ask me this question.

On my K-1, only box 13,14 and 17 are not empty

[PatriciaV]

Your best option may be to check Box 1 to trigger the material participation question. You can leave the Box 1 amount blank. After you enter the rest of the K-1, you should a see confirmation of the IDC deduction.

@c0nstant1ne

[gyaqwe]

I too have Box 1,2,3 empty. Box 13 is populated. Here's my steps:

Choose Type of Partner: General Partner, then Domestic Partner.

(I was getting tripped up by selecting type of Activity - other - which wasn't working).

Choose type of activity - Choose Option 1 - Business.

Next question: Did you Materially Participate: Yes

Box 13 - My code is J-Section 59(e)(2) expenditures. Yours is the same? Put the amount here. 

for the rest of the boxes put in your info as per the K-1.

See if the above helps. GL

[c0nstant1ne]

This did the trick. Thank you all for the help!

[gyaqwe]

Good to hear. I have a follow-on question. 

The Tangible drilling costs are subject to Section 179 bonus depreciation - as per my reading. What's the best way to enter these? Is there a way to enter these, 'connected' to this K-1 or will these be independent?

TIA

-G

[DaveF1006]

The 179 deduction is reported at the partnership level and your share of the deduction would be reported in line 12 of your K1. You cannot report this independently without it reported first by the partnership on it's Form 1065.

@gyaqwe