K-1 Line 20 Z (199A) with multiple activities
I have a single K-1 form with multiple rental properties and Passthrough entities listed in the SECTION 199A INFORMATION, BOX 20, CODE Z, like below:
Rent - Property 1 address
RENTAL INCOME (LOSS) -****.
UNADJUSTED BASIS OF ASSETS xxxx.
Rent - Property 2 address
RENTAL INCOME (LOSS) -****.
UNADJUSTED BASIS OF ASSETS xxxx.
PASSTHROUGH - ABC LLC
EIN: 9999999
RENTAL INCOME (LOSS) -****.
UNADJUSTED BASIS OF ASSETS xxxx.
PASSTHROUGH - XYZ LLC
EIN: 11111111
RENTAL INCOME (LOSS) -****.
UNADJUSTED BASIS OF ASSETS xxxx.
How do I enter this information when I get to the "Enter the amounts from your K-1 QBI statement" screen? Should I sum up all the RENTAL INCOME (LOSS) and UNADJUSTED BASIS OF ASSETS values from the K-1 and enter in the Rental Income (Loss) and UBIA of Qualified Property fields in this screen? Or, should I create multiple K-1 entries using the same partnership name and EIN as the first entry, where I do not repeat any amounts except the Box 20 Z field in subsequent entries (Box 2, 5 and Box 20 A, N are entered only on the first K-1 entry) and then enter each line item from 199A into the QBI statement screen?
Answers
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Hello ftusa,
Because your K-1 includes passthrough entities (ABC LLC and XYZ LLC), the IRS requires the QBI information from each entity to be tracked separately. Combining all the amounts into a single QBI screen entry is not the correct approach here.
The recommended method is to create multiple K-1 entries in the software. For the first (main) entry, enter all of your income boxes as normal, including Box 2, Box 5, Box 20 Code A, Code N, and Code Z. On the QBI statement screen that follows, enter the 199A information for the first activity (Rent - Property 1). For each additional activity, create a duplicate K-1 entry using the same partnership name and EIN, but leave all boxes blank except Box 20 Code Z. On the QBI screen for each of those entries, enter only the 199A figures for that specific activity or passthrough entity.
So in your case, you would have four total K-1 entries: one for Rent - Property 1, one for Rent - Property 2, one for ABC LLC, and one for XYZ LLC. The duplicate entries will have no Box 2 or other income amounts, so they will not double-count any income on your return.0 -
I am seeing the following error when I create multiple K-1 entries as you recommended. This is a red alert and is not allowing me to file until I correct it. How do I proceed with this approach?
Partnership (Schedule K-1) Income/Expenses Missing
You didn't enter income or expenses for these partnership K-1s:
<Partnership Name><Partnership Name>
<Partnership Name>
…Please go back to the Your Partnership or LLC Income (Schedule K-1) screen and review the partnership K-1s listed above.
If you did NOT have any income, expenses, or carryovers for a partnership K-1 listed above, please go back to the Your Partnership or LLC Income (Schedule K-1) screen and delete it.
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Hello ftusa
Our software requires you to enter more than one Schedule K-1 in the case that your Partnership or S-Corporation has more than one of the boxes 1, 2, or 3 with entries. Our software needs a different K-1 to report to proper place for Ordinary Income (box 1), Rental Real Estate income (box 2) or Other Rental Real Estate (box 3).
Your alert would indicate that the separate K-1(s) didn't have the entries into the separated boxes. A Schedule K-1 without any box entries does not allow our software to move forward for filing purposes as it is expecting to have entries to add to other forms and schedules.
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