What to enter for K-1 Line 20 for K-1 with both ordinary business income and rental income?

[S8NpTl]

In my K-1 have both box 1 and box 2 checked. As I understand it it is real estate eFund which has both a Real Estate Development (box 1) and Rental (box 2) lines of business, hence the multiple incomes.I understand I will need to fill out two K-1 one for each.

Line 20 code V, Z, AA, AB are listed with "STMT". When I checked the supplementary statement. I find that Code V lists out everything in %, such as:
"UBTI included on Line 1 -Qualified ORG*  100%", "UBTI-Included on Line 2 - Qualified ORG* 17.06%" and so on for each of the line/boxes that has a dollar amount. In Turbotax the field for Line 20 code V simply has a dollar amount. My question is what should I enter here? And should I enter the same value for each of the two K-1?

For code Z, AA, AB it's looks more straightforward, as there are specific dollar amounts associated for each of code for each line of business. My question here is: should I include a Line 20 for each of the two K-1 and include specified code amounts for each (depending on if it's the real estate developement which goes with box 1's K-1, or the residential rental real estate which goes with box-2's K-1)?

[DanielV01 · Accepted solution]

You have two questions

What do I do with the code V amount in Box 20?  On the K-1 form (instructions to follow below in the second answer), you will get a chance to enter in Box 20 code amounts.  Code V is Unrelated Taxable Business Income.  Enter the amount in the box on that screen and move on.  That box is informational as does not affect your tax return.  The next boxes do, however.

Should I include a Line 20 for each of the two K-1 and include specified code amounts for each (depending on if it's real estate development income in box 1 or the residential rental income in box 2)?  YES!  That is exactly what you want to do.  These codes are essential because they determine the QBI deduction on each partner's individual tax return.  

Separating how much income and assets attributable to each endeavor is critical for QBI to calculate.  Code Z is Section 199A income (income qualifying for QBI considerations on the personal return.  Code AA are Section 199A wages (heps to determine QBI deduction when an individual's income is over the phaseout threshold).  Code AB is Unadjusted Basis Immediately After Acquisition for depreciable property owned by the Partnership.  These codes must be on the individual Forms K-1 for QBI to calculate, and should be apportioned or allocated to the correct business venture being reported on the K-1.

You may find the following FAQ helpful:  https://ttlc.intuit.com/replies/7036528

[HydroSci]

In TT Business I cannot figure out how to complete a 1065 partnership K-1 and get the QBI without increasing the capital accounts and balancing schedules L and M-1 M-2 etc.  (husband and wife LLC)

First: If I report bus income to Line 1 - Ordinary Business, then it accumulates automatically in the capital accounts.   However, because it was paid out to the partners (husband and wife - two partners) the capital accounts should not accumulate income.

Second: I also want to distribute the income unevenly, even though the profit percentages are 50% for the two of us.  In the past CPAs have done this with a statement explaining the distribution as "proportional share of aggregate".  Is it O.K. to override the defaults and do that?

[HydroSci]

Also - I tried entering the pass through amounts as Guaranteed Payments, but those were then not counted as QBI.  

[nap11040]

TT wont allow me to efile.  It keeps stating that, on schedule K-1, box 20, code Z has been entered but no section 199A income has been entered in Statement A.

TT wants this corrercted  before allowing me to efile.   I entered all appropriate figures from K-1 form.  I don't know haw to correct.  Can I just not report boz 20 code Z?

[DavidS127]

Enter the code Z when you enter the K-1 box 20 screen, but you don't need to enter an amount on that screen.  Continue on, and you'll find the screen  "We need some more information about your 199A income or loss".  When you check the box next to a category on that screen, a place will open up to enter the amounts from the Statement or STMT that came with your K-1.  The applicable category (or categories) on this screen (and the following "Let's check for some uncommon adjustments" screen, if applicable) must be completed in order for your K-1 QBI information to be correctly input into TurboTax. 

To get back to the K-1 summary screen and find the Schedule K-1 to edit, click the "magnifying glass Search" icon on the top row, enter "k-1" in the search window and press return or enter, and then click on the "Jump to k-1" link to find the K-1 you need to edit.

Here are the "We need some information about your 199A income or loss" and "Let's check for some uncommon adjustments" screens where you enter the information from your K-1 Section 199A Statement/STMT: