K-2 (Foreign Info) How do you specially allocate depreciation on the K-2

[yoyo]

The new K-2 form. First off - Ugggh in general about the silly requirement! Anyway, it appears that there is no method to specially allocate depreciation. The K-3 form totally ignores special allocations that were done in all other parts of the input and just slaps a flat Profit % on the individual K-3. Am I missing something? has anyone else figured out a work around. There are millions of partnerships with S/A ... so can't imagine that this hasn't come up already. I have a call in to Lacerte, but it seems like there is no solution at this time. Yes, I realize I can extend but just trying to get some of these filed. If I didn't mention it a big, gigantic Uggh about this silly thing.

[sjrcpa]

You can't efile the 1065s with K-2 until March 20 nor the 1120S until mid-June so you're looking at extensions anyway.

Yes it has been mentioned a few times that the software doesn't let you do special allocations on K-2/K-3. No word from Lacerte if they will fix.

[yoyo]

It is my understanding that you can file K-2s prior you just have to attach them as PDFs, which is automated so no big deal.

[gerryport2]

Hi!

It's not the most straightforward thing to do in Lacerte, however there is a way to allocate every item on the K3. First go to Screen 86.2. Once you input the amounts on this screen, everything here will be allocated based on partner %age. If you wish to specially allocate one specific item such as guaranteed payments or depreciation, you need to add a new prefix with the same country (on the left side of your screen click "Add"). Then only make an entry in the field that will be allocated differently (guaranteed payments, depreciation, etc.). Then make entries in the "Partner overrides: (-1 = none) (O)" with the appropriate percentages for this specific item. This will allow this specific item to be allocated based on your override, while everything else entered in the other prefix will be split based on partner %age.

Hope this helps! 

[yoyo]

Thanks! Although I haven't yet tried your suggestion, I will give it a whirl eventually. The approach I took on the first 5-6 partnerships that I couldn't get out of preparing the darn K-2 on was to provide supplemental information that says " the IRS instructions don't allow for it but if your preparer wants to input the S/A depreciation difference - here is the amount" and referenced to an AH code they could use. I don't think 99% of the partners are going to attempt to add up these numbers from 5 - 40 K-1s and input it on a Form 1116 anyway - and suspect it won't make a rat's &*$ of difference even if they did.

[cboggeln]

We are having the same issue as yoyo and reported the problem to lacerte that we are not being able to specially allocate the k-3 numbers.  Most of our partnerships have special allocations so this is just not acceptable.  Below is Lacertes response:

Dear 

You contacted a member of our support staff regarding an unexpected behavior experienced in Intuit Lacerte. We promised to send you periodic updates on case number 1575980896 to keep you informed. Below is the latest update:

2021 PAR US Schedule K-3 Partner Overrides for Part II Section 1 Missing

This unexpected behavior has been determined to be working as designed. For more information related to this investigation, click Here

No further updates are scheduled for this Investigation. This will be our final communication for case number 1575980896

We thank you for your patience.
Intuit Customer Success

[cboggeln]

We were told by Lacerte account manager that the only way to get their development team to address special allocations is to submit calculation challenges....sooooo Please, submit challenges so we can get this fixed!

[qbteachmt]

Do you get IRS e-newsletters?

https://www.irs.gov/newsroom/irs-provides-further-details-on-additional-relief-for-certain-partnersh...

"The IRS today provided further details on additional transition relief for certain domestic partnerships and S corporations preparing the new schedules K-2 and K-3 to further ease the change to these new schedules. Those eligible for the relief will not have to file the new schedules for tax year 2021."

[cboggeln]

Yes I get the IRS Newsletter and their relief is not helpful for my partnerships so I still need Lacerte to address this issue asap so we can complete the forms correctly

[kgreen8393]

Thank you so much for this suggestion.  This works very well and is better than manually preparing and attaching.  I would suggest people try this.  Thank you gerryport2

[gerryport2]

You're very welcome. Glad I can help. I can confirm that I have used this process for various clients, and it has come out exactly how I need it to on the forms.

[dennisj1]

I do not see screen 86.2 in the 2021 Partnership module. Any help?

[gerryport21]

Yes, after an update in Lacerte, this screen is now 78.2

[dennisj1]

Any idea how to complete a Special Allocation for Sch K-3? My partnership return has balances on Sch K-2 that are being allocated on Sch K-3 based on the partnership percentages. Screen 29 for the K-3, Part II, Sections 1 & 2 Special Allocation does not have any balances in Amount Available for Special Allocation. Any ideas?

[dennisj1]

Challenge submitted, see case: 1590839503. This is very frustrating!

[cboggeln]

The issue of not having the ability to specially allocate on k-3 is EXTREMELY frustrating AND costly as most partnerships that have this level of complexity to require the forms have special allocations. To not have one screen to do allocations like we have for schedules k-1 is ridiculously time consuming and costly to us and our clients. If Lacerte does not address this year, we will be looking for another provider next year that does for our partnership work. Please pay attention to this Lacerte developers!

[dennisj1]

gerryport: THANK YOU! YOU WERE 100% CORRECT! when you earlier wrote the below and then redirected me from 86.2, to 78.2 in the Partnership Module. I tried it and it worked PERFECTLY!!! : "It's not the most straightforward thing to do in Lacerte, however there is a way to allocate every item on the K3. First go to Screen 86.2. Once you input the amounts on this screen, everything here will be allocated based on partner %age. If you wish to specially allocate one specific item such as guaranteed payments or depreciation, you need to add a new prefix with the same country (on the left side of your screen click "Add"). Then only make an entry in the field that will be allocated differently (guaranteed payments, depreciation, etc.). Then make entries in the "Partner overrides: (-1 = none) (O)" with the appropriate percentages for this specific item. This will allow this specific item to be allocated based on your override, while everything else entered in the other prefix will be split based on partner %age."

Hope this helps!

[dennisj1]

I must also state that it's amazing that users can figure this stuff out on there own!

[abctax55]

@cboggeln

DID you see this answer? Maybe you don't have to change software after all.

Yes, after an update in Lacerte, this screen is now 78.2

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[abctax55]

Yes, after an update in Lacerte, this screen is now 78.2

[dennisj1]

I only have gratitude for the writers on this page. I had no intention of changing software, that was someone else. However, I will point out that I spent a solid hour on the telephone with LACERTE and they could not instruct me how to do a Special Allocation on the K-3.

[abctax55]

@dennisj1 Dennis, I tagged @cboggeln in response to his/her comment; I wasn't referring to you.

And FYI, those of us that come up with some of these answers have been using Lacerte for decades. I've considered changing software at times over those decades but I can usually make Lacerte do what I want it to so I've never actually pulled the trigger. A case of the devil ya' know vs.....

[MosheR]

I've been having this issue for the last couple of years. I was previously doing it all on paper and attaching pdf (ugh), but now came across your suggestion. However, it doesn't seem to be including the amount on the form. Did this work properly for you?