Allowable Miscellaneous Deductions

Forum|Forum|5 years ago
March 31, 2021
8 replies
54 views

According to the 2020 IRS Publication 529 (Miscellaneous Deductions - page 9), you can deduct Excess Deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust.

It doesn't look like this deductibility happens, however, in my ProSeries Basic software. I have entered excess deductions with codes A, B, C, and D on the Schedule K-1 worksheet (estate & trust). The item coded B goes to the Schedule A Line 16 worksheet and appears on a line that says "Deductions related to portfolio income, misc. deductions, & excess deductions on termination from Schedule(s) K-1." But the amount isn't going to Line 16 on the Schedule A, which I would expect based upon the Publication 529 that I cited above.

Am I missing some additional coding that is needed? Or is this something that the ProSeries Basic software doesn't handle? I would appreciate some direction about how to resolve this matter since it will change the result for the client's itemized deduction total.

ProSeries Basic

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Just-Lisa-Now-

Intuit Community Champion

Ive seen people mention this earlier in the season, I would have thought the program would be updated by now.

@IntuitAustin any word on this ?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

IntuitRebecca

Level 6

Hi @CovingtonCPA ,

The final year deduction for box 11, code B, is not fully automated the way that codes A, C, and D are.

The amount reported in code B should be entered on the appropriate line of the Schedule A - the fiduciary should provide a statement describing the types of deductions. My understanding is that under TD 9918 these non-miscellaneous deductions retain their character, so they may not always need to go to line 16, and ProSeries doesn't have enough info to populate the deductions in the right place automatically.

The area on the Schedule A line 16 worksheet where you're seeing the amount transferred is actually part of the worksheet that's for state use only, to calculate miscellaneous deductions subject to the 2% limitation for those states who don't conform to the Tax Cuts and Jobs Act. The 2% miscellaneous deductions can't be taken on federal returns anymore.

- Rebecca

C

CovingtonCPAAuthor

Level 2

My client's final year deductions for box 11, code B, relate partially to real estate taxes and partially to miscellaneous deductions not subject to the 2% floor which would be fully deductible if the estate/trust was still active; hence, my understanding of the final regulations that you cite is that they will be fully deductible for my client. A few days ago, I spoke with a ProSeries technical team member, and the best advice she could give me was to override Schedule A, Line 16 to report the deduction and disable error checking when e-filing. However, if I do this and submit the return, it gets rejected.

D

dhoyt

Level 4

Sorry to resurect an old thread but I'm not sure it was ever resolved and I have a similar problem. When entered on K-1 worksheet, Line 11B Non-miscellaneous Itemized deductions gets carried to miscellaneous itemized deductions on schedule A, and therefore is not dedcutible. Any idea where these deudcutions should instead be listed?

Also are all non-miscellaneous deductions deductible, or are they only dedcutible if they are a deduction that would normally be an allowable Schedule A deduction? For example, Real Estate Taxes could be deductible on Schedule A since real estate taxes are normally deductible. But what about utilities, home insurance, postage, etc that would not normally be deductible on schedule A? Because they are coming from a Trust that has been terminated, are they deductible in some way on schedule A? I've been reading and re-reading the various publications and opinions on this and I'm not understanding it so any help would e appreciated.

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