Entering 1040 domestic production amounts for Form 8903 from Schedule K-1 Partnership Worksheet

This article will show you how to enter the domestic production information for Form 8903 when it's reported on the Schedule K-1 from a partnership in the Individual module of ProSeries.

According to the IRS instructions for Form 1065, there are two methods to report domestic production information on the Schedule K-1, Line 13.

Method 1 - Using code T

One method is with code T with a note to see the statement attached to the Schedule K-1.  This statement contains additional information used to report the domestic production deduction at the partner level, such as:

• Domestic production gross receipts (DPGR)
• Gross receipts from all sources
• Cost of goods sold allocable to DPGR
• Cost of goods sold from all sources
• Total deductions, expenses, and losses directly allocable to DPGR
• Total deductions, expenses and losses directly allocable to a non-DPGR class of income
• Other deductions, expenses and losses not directly allocable to DPGR or another class of income
• W-2 wages properly allocable to DPGR or another class of income
• Any other information a partner needs to use the section 861 method to allocate and apportion cost of goods sold and deductions between DPGR and other receipts

To enter the information for code T:

1. From the Forms menu, choose Select Form (Find Form if using ProSeries Basic) to view the Open Forms window.
2. Type the letter "P" to highlight the line labeled K-1 Partner and click OK to open the worksheet.
3. Scroll down to Line 13 and select code T from the list of codes.
4. Click the QuickZoom button to open a worksheet to enter additional information for codes R, T, U, and W.
5. Scroll down to the section labeled Code T: Domestic production activities information.
6. Enter the information included in the statement received by the taxpayer.

Method 2 - Using codes U and V

The second method is applicable only to eligible partnerships, who can choose to figure the Qualified Production Activities Income and Wages at the partnership level.  They report each using codes U and V on the Schedule K-1 Line 13:

• Eligible section 861 partnerships
• Eligible widely held pass-through partnerships
• Eligible small pass-through partnerships
• See the IRS instructions for Form 1065 for additional information regarding these types of partnerships

To enter the information for codes U and V:

1. From the Forms menu, choose Select Form (Find Form if using ProSeries Basic) to view the Open Forms window.
2. Type the letter "P" to highlight the line labeled K-1 Partner and click OK to open the worksheet.
3. Scroll down to Line 13 and select code U from the list of codes and enter the amount of qualified production activities income.
4. On the next available row, select code V from the list of codes and enter the amount of employer's W-2 wages.
5. Click the QuickZoom button to open a worksheet to enter additional information for codes R, T, U, and W.
6. Scroll down to the section labeled Code U: Domestic production activities income.
7. Enter the amount of qualified production activities income from oil related sources, if any.