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Level 2
posted Apr 15, 2023 4:46:49 PM

Smart Check Error - Schedule K-3 - Box 16: Foreign Transactions - Line J col 3

Hi,

 

I received a Schedule K-1 for 2021 taxes, and now for 2022 taxes, I received Sch. K-1 and K-3. TT says I have a carryover from 2021 taxes. Below is a sequence of all info I have entered thus far. The Smart Check has returned an error that is listed at the bottom. I need your help to determine what values or answer choices were answered that resulted in this error. I request you to take a look at the following sequence of answers and see if you find any calculation errors. Thank you for your time. I appreciate it.

 

Note: In Section 199A the Trade & Business is listed as Fast Food Restaurant. The dollar values used in the following description are approximate. I live in California State.

 

Schedule K-1: Box1 = -4342; Box14 = A: 0; Box15 = N: 68; Box16 = X; Box18 = C: STMT; Box20 = N: 669, Z: STMT, AG: $55401

 

Schedule K-3: Part II, Sec 1, Line 1A = U.S., and Column (a) & (g) = $56,008; Line 24A = US, and Column (a) & (g) = $56,008; Part II, Sec 2, Line 54 = Column (a) & (g) = $60,350; Part III, Sec 4, Line 1Paid = 0, 1Accured = 0, 2Reduction of Taxes (total) = 0. For all columns between b to f the value is zero

 

TT, Schedule K-3:

  1. Sch K-3, Part II, Sec 1, Line 24A = US, and Column (a) and (g) = $56,008 (values for columns 24b to 24f = zero). For Foreign Country or US Possession, the dropdown excludes the U.S. option. Is it ok to select the default option "(not applicable)"?
  2. For "Enter Gross Income Info" = values were entered in six boxes in sequence as = 0, 0, 0, 0, 0, and 56,005. FYI the Sum of lines 39, 40, 41, 42, and 43 is blank = zero. 
  3. For "Enter Deduction Info" = values were entered in six boxes in sequence as = 0, 0, 0, 0, 0, and 0. The "Deduction allocated at individual level - Interest expense", and "Deduction allocated at individual level - Other" were calculated as zero. FYI the Sum of lines 39, 40, 41, 42, and 43 is blank = zero. Line 54f = zero. Have I made an error calculating values for both Interest Expense and Others for the Deduction allocated at individual level?
  4. For "Entering foreign tax information" = values were entered in three boxes in sequence as = 0, 0, and 0. All boxes were blank as the form Part 3, Sec 4, pages 8 and 9 were blank.
  5. For "Describe the Partnership": two options were auto-selected - a) I have passive activity losses carried over from last year, and b) All of my investment in this activity is at risk. Can you provide guidance on what info I should review to confirm these two options? And if I unknowingly unselect one or both options, will it affect the taxes in any way?
  6. "Report Carryovers - Regular Tax" = "-1939"
  7. "Any other carryovers?" - none
  8. "Report AMT Carryovers", Box 1 = "-1939"
  9. "Report Other AMT Carryovers" = none
  10. "Any Qualified Business Income (QBI) Carryovers?" QBI suspended loss - passive = "-1939"
  11. Enter info about passive losses. For this section values for both Regular Tax "-1939" and QBI Deduction "-1939" for the 2021 year were populated automatically
  12. Section 199A income comes from the partnership that generated this K-1
  13. Entered Section 199A income as Ordinary Business Income (loss) = -4342; W-2 wages = 18087; UBIA = 8131
  14. Uncommon adjustments = none of these apply
  15. My taxable income does not exceed #340100. So answered a No
  16. In 2021, did you have any activities on your return that were classified as SSTBs or had income attributable to SSTBs? In Section 199A the Trade & Business is listed as Fast Food Restaurant. Referring to TT article "Is my Business an SSTB?", I saw "Restaurants and Food trucks" listed under "Business that are not SSTB" section. So with that reference, I answered NO to that question. Is this a valid choice?

Smart Check Error:

Sch K-1 Wks-Partnerships - Sch K-1 Partnership Additional Info. 1: Foreign other expenses allocated at partner level are listed but no foreign source income at individual level has been listed on the K-1 Additional information worksheet line 1.

Fgn Tax Ln J Ln 3 col 3 = "0"

Box 16: Foreign Transactions - Line J col 3 - Other expenses allocated at partner level - Foreign is shown as red font "0"

 

Let me know if you have any questions. Thank you!

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