I have received a K-1 with Box 20 line AH information provided in relation to a Section 1061 adjustment that I must include in my return. After a lot of research at the IRS website (https://www.irs.gov/businesses/partnerships/section-1061-reporting-guidance-faqs) I have determined that I need to add adjustments to form 8949 Part 1 line 1 and part 2 line 1 with the description "Section 1061 Adjustment" to recharacterize some of the net long-term capital gain reported in the K-1 in Box 9a from long-term to short -term. This is apparently new for form 8949 for 2021 returns.
Is this supported by TurboTax? I can't seem to figure out how to input the adjustment into form 8949. Any ideas
You may have to enter this manually in Forms Mode and make adjustments manually, which will not be possible unless you are using a desktop version of TurboTax (online versions do not support Forms Mode).
The IRS web page that you referenced says to enter it "as a transaction" on Form 8949. In other words, you enter it like a sale of stock. The description of the stock is "Section 1061 Adjustment." You can do this in the Step-by-Step interview. You do not have to use forms mode. You have to enter two sales, one short-term for Part I and one long-term for Part II. Enter the basis and proceeds for each sale as specified in the IRS web page. This will put the necessary entries on Form 8949.
You may have to enter this manually in Forms Mode and make adjustments manually, which will not be possible unless you are using a desktop version of TurboTax (online versions do not support Forms Mode).
Thanks for the quick reply. I have tried to determine a way to manually enter this on form 8949 in forms mode with no success. The input sections on form "K1P Add Info 1" that you highlight in your reply would not result on the adjustments flowing through to the 8949 as any items entered in line 5 under "Other*" reference having to "*Manually enter item here and on appropriate tax form or schedule". That is where I am getting stuck. Any thoughts?
I am using the desktop version if that helps at all.
The IRS web page that you referenced says to enter it "as a transaction" on Form 8949. In other words, you enter it like a sale of stock. The description of the stock is "Section 1061 Adjustment." You can do this in the Step-by-Step interview. You do not have to use forms mode. You have to enter two sales, one short-term for Part I and one long-term for Part II. Enter the basis and proceeds for each sale as specified in the IRS web page. This will put the necessary entries on Form 8949.
Thanks for this solution. This did exactly what I needed. I entered as a short term sale with the amount in the proceeds and zero cost basis and a long-term sale with the amount in the cost basis and zero proceeds (both with the description of "Section 1061 Adjustment". I had to include sale and acquisition dates so I used the last day of the year for both. Worked like a charm, recharacterizing the long-term gain to a short term gain.