ZZ code for Box 11 "other income" on Sch K-1 (1065)

[usataxiambhall]

Hello. I have a Schedule K-1 (1065) with a ~$30000 figure on box 11 with a code of ZZ. The partnership is a mortgage lending investment pool. The ZZ entries don't seem to go anywhere on the tax return.

Under "Supplemental Information" on the K-1, the ZZ is described as "Equity Financed Income". In addition, further down, there is a lengthy amount of other supplemental information. But none of it seems to be relevant to what to do with the above entry.

The only other item of interest is on line K1, partners share of liabilities, the "nonrecourse" beginning is ~$5000 and ending ~$85000.

I'm not sure if this ~$30000 is taxable and if so, how to report it. The issuing partnership says they don't give individual tax advice.

Any suggestions?

[jbgold777]

@usataxiambhall  Did you ever get an answer to this problem?

I have a similar problem with my K-1 (Form 1065), Box 11, Code ZZ, where TurboTax is not populating the screen that it has always populated -- in order to enter the breakdown of long term and short term capital gains from the K-1. I have used TT for over 10 years, always entering my K-1 without a problem. And now it is not allowing me to enter the info from the k-1 that is required.

As you are saying, the numbers don't actually transmit to the tax return and impact the tax balance.

Anyone? Please help!

[DaveF1006]

If you need to report gains and losses, there are other codes in Box 11 that may be used to report specific capital gains or losses. Ultimately, though, none of these impact your return.

@jbgold777 

[jbgold777]

Hi @DaveF1006 , thanks for replying. Code ZZ is the correct code according to my k-1. It was always code I but the IRS changed it this year and now it's code ZZ, and I think TT didn't adjust correctly.

I already tried every other code offered in TT (as you also suggested) and none of them populate the correct page (the page that has appeared for the past 10 years) where I can then enter the short term and long term gains that will then flow through to Schedule D. 

These numbers definitely do impact your return, otherwise the LT and ST numbers from the k-1 never flow through to Schedule D, LT and ST cap gains.

[PatriciaV]

Entering short and/or long-term gain (loss) under Box 11 Code S (non-portfolio) will report these amounts on Schedule D. 

To split the short/long term, you will need to access the K-1 Addl Info worksheet using Forms Mode (available only in TurboTax for Desktop). After you open K-1 Partner for this investment, look for the QuickZoom button under Line 11 (the box beside Code S will be red). This opens the additional info worksheet where you can enter short and long term under Code S.

See also: How do I save my TurboTax Online return as a tax data file? if you need to switch to the desktop version. Contact TurboTax Support and ask for a free software download.

@jbgold777 

[Jeanie99]

Box 11 says it's "ZZ", Not "S" though.  

@jbgold777  Any lucks figuring out what to do in this case?  I have also the long term and short term amounts that I need to put into Schedule D from this ZZ number.

TIA!

Jeanie

[jbgold777]

@Jeanie99 I was able to get the LT and ST gains amounts onto Schedule D two ways. However, I'm not totally sure either one is 100% accurately impacting my taxes based on my k-1. But it did work in getting the numbers to my Schedule D, and it did change my taxes due by what appears to be a ballpark correct amount.

1. Enter the Short term gain into TT as if it is in box 8 (short term cap gain box) of your k-1. Then enter the long term number into TT as if it is in K-1 Box 9a (long term cap gains).

2. Enter a "fake" 1099-B with a cost basis of zero and using the LT numbers from your k-1 and ST numbers from your k-1. This gave me the exact same result as doing option 1 above.

Of course, we shouldn't have to do any of this. TT should fix the bug they created. I have been entering my k-1 in TT for a decade and never had this problem.