I am working on a trust return (1041), and I entered oil and gas royalties from a 1099 on schedule E. I chose property type 6 in box 1b and included the royalty income on line 4, yet Proseries Professional is showing it as nonpassive income and including it on line 5 of the K1 when it should be line 6. Any ideas how to get Proseries to report it as passive income?
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Did you look to make sure you didn't check off a box on schedule E that says active participation?
The material participation and active participation checkboxes are all blank.
Wouldn't you want it on the K-1 Line 5 as Portfolio and Non Business income rather than Line 6 as Ordinary Business Income?
I need it to be classified as passive income. Proseries is forcing the royalty income to be non-passive on the K-1 worksheet (line 5) and Distributable Income worksheet [Part I, line 5e and Part II, column e (should be column f)] and I cannot figure out why. I do very few trust returns so I'm probably missing something obvious. The only income for the trust is oil and gas royalties.
There is no participation in the income generation. The trust receives periodic checks from oil & gas companies for royalties.
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