entering partner's 1065 K1 13W 2% deductions on 1040

Forum|Forum|4 years ago
September 26, 2021
1 reply
9 views

Partner has a K1 with box 13 code W showing legal & professional fees and management fees of $1,000 (formerly deductible by individuals under IRC 67 subject to 2% AGI floor).

I am attempting to do the entry on screen 20.1 so that the adjusted basis for federal and CA are correct but the result is no deduction on the 1040 but CA gets the deduction.

My solution so far is to enter -1,000 under Separately Stated income and deductions on the "state if different" column with nothing in the federal column. Then I enter 1,000 under 18C non deductible expenses but if I don't enter -1 for CA under the state column on 18C, the CA adjusted basis Loss allowed by basis limitation doubles to 2,000.

How should this be entered to keep CA and federal adj. basis correct and the 1040 and 540 correct? If I just entered it directly on schedule A, it would not tie to the K1 partnership information.

Thank you

Lacerte Tax

This topic has been closed for replies.

Best answer by sjrcpa

They should. Instead of fooling with it any more, adjust the basis in the basis section - other increase or decrease as needed.

Life is short.

George4Tacks

Level 15

I am confused. The federal basis is reduced $1,000 for non deductible expenses and the CA is reduced $1,000 for deductible expenses. Am I missing something?

Answers are easy. Questions are hard!

L

LSTAXAuthor

Level 5

I thought that even if the expenses are not deductible on the 1040 they should still reduce federal adjusted basis.

sjrcpaAnswer

Level 15

They should. Instead of fooling with it any more, adjust the basis in the basis section - other increase or decrease as needed.

Life is short.

The more I know the more I don’t know.

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