Form 1065 743(b) adjustment

[yam51]

Should the K-1 Section III 743(b) adjustment print in Box 13 with a code V?  If so, where is the input in Lacerte to get that to print?  And where is the input for Box 20U to show the remaining 743(b) adjustment?

Thank you.

[Strongsilence-CPA]

I input 743 amortization expense tin the Depreciation area.

It will appear as UPE on Schedule E.  UPE treatment is odd because UPE are allowed only when partnership agreements allow them.

It does not affect QBI, which was my conclusion after doing research.

Review the K-1 rec worksheet. It is listed with Unreimbursed expenses (nonpassive). This sounds odd but I think it is correct. 

[yam51]

Thank you for replying.  I might be asking the question incorrectly.  I've been reporting the 743(b) step up in basis correctly each year and specially allocating it to the applicable member.  Last year I neglected to make the adjustment to tax basis.  It's only about $1K each year that is specially allocated.  This is my only client with a 743(b).  I'm trying to report it correctly (tax basis) for 2021.  Here's what I did...I just don't know if it's correct:

1. Increased the beginning capital account in the M-2 screen by the prior specially allocated depr  (and adjusted the applicable member's beginning balance) and reduced the beginning A/D on the BS by the same amount.

2.  Lacerte automatically puts the cy specially allocated depr on line 4 of the M-2.

Should the cy specially allocated depr go in Box 13, code V?  If so, how do I do that?

How do I get code U to print in Box 20 and enter the remaining specially allocated depreciation?

Any assistance would be much appreciated!

Thank you!

[Strongsilence-CPA]

1. It sounds like you want to calculate the correct beginning basis as of 1/1/2021.  You forgot to take the deduction in 2020.

I don't see the reason for making any basis adjustment as of 1/1/2021. There was no deduction in 2020 so you there is no reason for it.  

If you are you going to amend then you can do it.

Have I misunderstood? 

Now I need to admit that I have been thinking of a 754, which is my client's situation. So this might not be exactly on point. 

2)  Lacerte automatically puts the cy specially allocated depr on line 4 of the M-2.  I don't think LC doesn't automatically put it. My input shows that you choose whether to adjust Schedule K or Schedule M-1 or both.  So clearly I'm not understanding.  

Either I don't have the bandwidth or we need to share screens so I can better understand.

[yam51]

Can we please do a t/c and screen share?  If so, how do I contact you?

Thank you!!