K-1 20P

[michele]

Have a client with multiple k-1's  the due to sale of farm property  there is 20P figures on the k-1's

is there a way to report these to generate the correct forms in Lacerte

thanks

Michele

[PKCPAMST]

Michele,

A partnership reports additional income tax imposed on certain installment sales by Code Sec. 453(A)(c) with a Code 20P.

To report the information in Lacerte, go to Screen 45 – Other Taxes, Section Other Taxes.

In the Prompt Section 453(A)(c), open up the Supporting Detail with Control-E and enter the amount(s). They will appear on Schedule 2 – Additional Taxes, on Line 8 as 453(A)(c).

PK

[michele]

I did that the code P had a $478,000. I do not believe he owes $478,000.00 in additional tax

I was wondering if I would have to calculate the tax on 478,000 and then enter it in additional taxes

thx

[PKCPAMST]

The taxpayer’s tax for the year is increased by the “interest charge”. Yes, you will need to calculate that. Tonight I will post a sample calculation.

[PKCPAMST]

Please review Sec. 453(A)(c) to see if it applies to your situation with respect to the interest charge. (It  applies only when the year-end installment receivables balance from sales for more than $150,000 during the year exceeds $5 million. That's at the partner level.)

If does, per IRS Notice 88-81, the partnership is required to provide the partners with the information necessary to calculate the interest charge, usually by attaching a statement to their Schedule K-1.

If you need further assistance, please let me know.

[michele]

Thank you for the reply. I feel like the k1 was prepared wrong after talking again to clients.

they have revived nothing. The land was on a preservation contract and  the county has to pay them by 2024 yet the   Section 20 P

shows 479000.00

michele

[PhoebeRoberts]

That $479,000 is the deferred installment sale income, not an item of income tax. If it's the only installment sale item your client has, the de minimus exception under Sec. 453(A)(c) applies.

I have a client who has a bunch of pass-through installment sale income shown on K-1s; I have no reason to believe the K-1 presentation is incorrect based on the facts you've provided.

[PKCPAMST]

Michele,

Since the amount owed to your client by the county is less than $5 million, that means  there is no Sec. 453A(c) tax on it. That’s good news for your client!

PK

[justataxnerd]

I found this way more helpful in figuring the Interest on Deferred Tax Liability the the form instructions  See pages 8-13.

https://www.irs.gov/pub/irs-utl/interest-on-deferred-tax-liability.pdf