K-1 and Form 8995

[DMorris1508]

I have a K-1 from a partnership in an investment club.  It is not a REIT nor a PTP (publicly traded partnership).  On the K-1 received for this investment, our treasurer entered 77. on line 13 “Other Deductions” and coded the entry “zz”.  That amount represents the club’s deductible expenses for the year.  That amt is also entered on the K-1 Line 20 and coded “B”.

Turbotax automatically populates info on the form 8995 Qualified Business Income to calculate a deduction.

I also get the following error after running the Smart Check.

Check This Entry

Sch K-1 Wks-Partnerships (LCIC) — Sch K-1 Partnership Additional Info 1: Other taxes has no entry.  A total of 77. Has been entered for cod(s) W to ZZ. Code(s) W to ZZ require(s) additional information.  Please enter 77. On the appropriate line or lines in this section.

I did not select this as a PTP and do not think that IRS form 8995 is applicable to my situation.

[Mike9241]

right an investment club (except if it invests in real estate rentals)  is not a business if all it does is invest in securities.  Without knowing what the $77 is for it's not possible to say that it was miscoded but ZZ can represent many things.  Turbotax provides for entry of 9 different types of expenses on line 13zz and your K-1 should have described what they were for.  Code B in box 20 would seem to indicate that they could be  1) Portfolio deductions 2% (not deductible for federal purposes)  or 2) early withdrawal penalty  - deductible on page 1 of 1040. the other 7 categories don't seem appropriate. Another possible code would have been 13H investment interest expense  - deductible if you itemized subject to investment income limitations. Ask the treasurer if there is no clarification on the k1 as to what other is. Turbotax does not know what to do with code ZZ unless it is further classified. 

In Turbotax did you check the box investment club? 

There is also a box that asks about a 199A business that should also be checked no