schedule K-1, box 16 is checked (k-3)

The purpose of the entry is to report foreign income. It appears you didn't have any of that since the schedule K-3 lists the source of income as being the United States. So, you can inquire of the broker if there is any foreign income to report, if not, you should leave the entry off of your tax return.

column A amounts which is where that $1797 shows up does not get entered in TurboTax K-3

you are correct, thank you for your advice. 

Are you saying to not tell Turbo tax you have box 16 checked? I have 2 K1 with no foreign income or involvement in the K1.

Can anyone answer this:  

Foreign Country or U.S. Possession dropdown box NOT APPLICABLE? Given there is no drop down menu for US is this a problem because it defaults to Not Applicable? 

This is copied from the K3 PDF filing form (If income is U.S. source, enter “US.” Do not enter “various” or
“OC” for the country code. )

Given the latest ruling for the IRS there is no need to file a K3 so can you just say no to Check mark on line 16?

Limited exception to filing January 11, 2023

New domestic filing exception for completing Schedules K-2 and K-3: The final instructions include an exception for filing and furnishing Schedules K-2 and K-3 for tax years beginning in 2022. Under the domestic filing exception, a domestic partnership (as defined under sections 7701(a)(2) and (4) of the Internal Revenue Code) does not need to either (a) complete and file with the IRS the Schedules K-2 and K-3, or (b) furnish to a partner the Schedule K-3 (unless requested by a partner after the one-month date (defined in criterion number 4, below)) if each of four criteria are met with respect to the partnership’s tax year 2022

According to the Tax Advisors, the new detailed schedules must be filed by all passthrough entities with items of international tax relevance, including entities with foreign partners and international activities. 

Also Tax Advisors state that  partnerships with strictly domestic income and assets may have to complete this section of the Schedules K-2 and K-3 if they have partners that are claiming a foreign tax credit. Even though you may not claim the credit there may be other partners that do, which include the foreign partners.

Now the sticky part is that these K-3 when issued cannot be ignored. Just for clarification purposes, what type of income in reported on your K-3 and the columns that reflect the income? Or just tell me , what is reported if anything?  

@tspazok1 

Thanks per your request is the following:

Part II Foreign Tax Credit Limitations

Section 1 Gross Income

Line 3 Gross rental real estate income 

Line A OC ( Which is wrong per 1065 K3 IRS doc, can only be US or other countries in the drop down menu, Turbo Tax is also wrong given there is no option for US.

Column A US source 60,327

Column B 0.

Column C 0.

Column D 0. 

Column E 0.

Column F 0.

Column G total 60,327

If you go to Part II Section 1 Gross Income line 24 same numbers appear as above

THANKS 

Having same issue as other poster. Box 16 checked but all transactions (maybe $200 total) on k3 is US. TT gives error message. No way to resolve other than unchecking box 16 but that is technically inaccurate. LLC says they must provide k3 in case other partners need.  Doesn't seem as if a final answer has been given here to this question? And is this a tax software or irs issue?

In my opinion its a TT issues given they don't provide a drop down menu for US.

There are other reasons why your K-3 was issued. In the first drop-down you referred to, you would only pick a country if you received foreign income or a Foreign tax credit.  You received US-Based income so you may other income reported other than what is in Part 1 or Part 2.  To clarify, how was the $200 reported and in which part of the K-3 was it reported?

@Jasmith63  

part II is the only section with any transactions and it is all US .  net loss of $244 (other income, rental expense) all in column A (US only source) of the K3.  so line 20, 33, 34. nothing in any other section or part of the k3.   

This is something that should have been reported in Box 2 of your k-1. Is this amount reported there?  I think what happened here is that this income is reported to the foreign partners in your partnerships to be reported on their tax returns but has no relevance to you.

According to the K-3 requirements, K-3's are sent out to ALL partners regardless if they have a reporting requirement or not because of  international tax relevance.

@Jasmith63  

As an aside, Form necessary for all Box 16s. Line A can be left blank for eg., US farmland sale.

Let’s assume you are a domestic taxpayer, and you received a K-1 with box 16 checked for a partnership that is also only domestic. if you do have foreign components this may still help, but I’m answering for domestic. 

Partnerships have to provide that info, because they don’t always know if the taxpayer needs that info for their own foreign filing. The info they provide is voluminous, and doesn’t match up with any of the line numbers on the K-3 worksheet form, and trying to find it online is like searching for “what fruit and vegetables can I bring into Canada).

The answer turns out to be simple, and it took me a bit to find it. Go to the K-1 line 16 worksheet (right under where you checked (K-3 attached), and right click on line B (Gross income from all sources). The pop up will tell you for each line B through R exactly where on the K-3 to find the information. If your sources are all US, most likely all you will need is line B entered to make the red box on Line 16 go away. But check the other entries on your own K-3 to be certain.

You leave line A blank if the entity is US, there is no US option on the drop down menu.

Perfect thank you so much given this confusing issue. This makes sense.

"Go to the K-1 line 16 worksheet (right under where you checked (K-3 attached), and right click on line B (Gross income from all sources). The pop up will tell you for each line B through R exactly where on the K-3 to find the information. "

Is this answer for the TT Home & Business Edition?  I don't get the pop-up noted above from an earlier answer. Now what?

I have only US income from my K-1, but TT requires a Foreign Portion entered,  because I have a K-3. And entering zero does not work.

I’ve got the Federal and State version of TurboTax, but I can’t see why they wouldn’t have that in your version. It does let you enter a K-1 right?

You may need to go to forms view instead of just the easy method. Look and see if you get a K-3 worksheet popping up on the left side listing (in forms view) after you check box 16 on the K-1 to indicate K-3 info is attached. 

Did you found any solution for this? Forms view is not available for TT online version. I am also struck on this same issue and not able to submit my return

Your help is appreciated.

Be sure to edit your k-1.  When you reach an entry that looks like the screenshot below, uncheck Box 16 if it is checked. If you have done this and still receive a message, i would suggest deleting the K1 and then reenter. 

Also i would go to the left black panel of your program and go to tax tools>tools>delete a form>delete the k1.  After doing this, sign out of your return and sign back in again so the changes can be made.

Meanwhile, I have included this screenshot to uncheck the box 16 if you haven't tried this already.

@nke16 

Frustrating that TurboTax has still not resolved the K-3 issue. Filing for 2022 tax year and the same issue still exists. No option to choose US as a country. 

The K-3 is used to report foreign income.  If you know you will not receive foreign income or do not feel the K-3 applies to you then you can uncheck box 16.  However, if you receive a K-3 at a later date with foreign income you will need to amend your return to include the income.  If you will be receiving the K-3 with foreign income, you should file for an extension and file the return once the K-3 is received.  Keep in mind that an extension gives additional time to file but not to pay your taxes.  If you know a balance will be due, you will need to make an estimated payment to cover the tax to avoid any penalties for not pre-paying tax.

@tonynick1 

Thank you for the response Hope S. Hopefully you can shed more light on my predictament as stated below.

My trouble is that Turbo tax doesn't list the US as a country when asked for the country?

My K-3 states $$ in  all the columns noted are US, ie Part II Section 1, column a, line 24. Also in line 33,34,37,40 all in column a. In addiiton $$ values in line 41,43 under column f . All line items carry over to column g (total).

Finally in line 53 and 54 stating deductions under column a (US source) and carried over to columns f and g.

What am I to do with these values, uncheck box 16 under K-1 and ignore them cause there US source?

Turbo tax is weak on this, second year in a row with no details on how to address these scenarios.

Thank you.

I had to switch to the TT download to complete this and a few other things.  the online is a mess and missing so much.

Download? I can download the software verses doing on line? I didn't know that was an option. How do I do that? I have so far been working online.

I'm having hugh issues with form 8949 filling out. It will only enter one account number / line item where as I have several accounts with both short and long term covered and uncovered capital gains / losses. Calling TT has been dreadful! 

if you haven't paid any money

abandon TurboTax Online and go to Intuit to purchase the TurboTax CD/download  version for your PC.

"Deluxe" option is sufficient for stocks/investments reporting.

I signed in to the TurboTax Online this year to check it out, and it was horrible.

@tonynick1