K-1 Line 11 Other Income

[dtstoner]

I am invested in a private equity fund that reports on a partnership K-1 (1065).  The investment is involved in life insurance life settlements. The K-1 includes nominal interest and capital gains, but the bulk of the income is reported on line 11 Other Income (Loss) as code I (Other Income). 

Entering this in Turbotax as-is generates no tax liability for this income. Should it be entered in some other way?

Partner instructions show the details in 3 line items:

- Income (loss) from trading activities

- Swap income

- Other income

It also shows line 13W deductions including

- Management Fees

- Professional Fees

- Organizational Costs

- Other expenses

Can this investment be handled in Turbotax?

[dtstoner]

The provider of the K-1 says that the Other Income should be reported on Schedule E. 

There is an option under Code I detail that does this for non-passive income ("Other Non-Passive Income (Loss) to be Reported on Schedule E, Page 2"), but no corresponding option for passive income. The "Learn More" link under the Other Description section doesn't offer much assistance. How can I get TT to map this income to Schedule E?

[dtstoner]

I believe that I solved my own problem by trial and error. Here is my "hack."

I entered the K-1 as usual in order to be sure I am providing all the required information to match the K-1.

Then I created a "fake" K-1. Rather than calling it by the partnership name, I gave it the name "Other Income" but used the Tax ID of the partnership to trace its origin. Then I entered the Other Income amount as Box 1 Business Income. This created a new line on Schedule E line 28 showing the amount as passive income, which is what I was looking for.

This is not as good as if Turbotax handled it directly, but it allowed me to report my income accurately, and matched the way a professional preparer had done it for a prior year.