Thank you! I had already included it as nonqualified dividend income as an entry in the dividend screen. Then in the K-1 screen I increased the basis. I thought about including it as misc. income but then it would not have gone to the 8960. The only description on the K-1 is "Subpart F Income".

I'm not sure why Lacerte has a spot for it in the K-1 input when it doesn't go anywhere. They do give you a diagnostic but the only thing that does is let you know you have more work to do if you hadn't figured that out already.

Thanks again. Always nice to have a second opinion.