Since 1065 paid DC taxes I will treat all on the 1065 as a Federal deduction. It is a MD add back since state taxes are not allowed as a state expense. 

On the individual MD I will report 100% to resident state and ignore DC K-1 that was printed. There is no DC filing at the individual level. Just not sure why DC K-1 printed. 

Bottom line DC collects franchise tax only  No income tax  

I hope I understood you all. And thanks.