How to resolve diagnostic ref 59220 in Lacerte

When working on fiduciary (Form 1041) return where you're reporting a passthrough K-1 activity with include from multiple categories, you may encounter the following diagnostic:

"When a passive Passthrough K-1 activity contains more than one of the following, these items will be combined may not be reported on the correct lines of the beneficiary's Schedule K-1: ordinary Income, Rental Real Estate Income, Other Rental Income, Other income and deductions-passive. To avoid this ,these items should each be reported separately on their own Passthrough K-1 activity." (ref.# 59220)

Why is this generating?

This diagnostic is generating because of a longstanding limitation in the fiduciary portion of the program. Because of this limitation, rental real estate income, ordinary income, and other rental income through a passthrough K-1 each have to have their own activity.

How do I resolve this diagnostic?

You will need to take the passthrough K-1 activity and break it down by category, creating a passthrough K-1 for each income category.

For example, if the passthrough K-1 activity you're report has 1,000 ordinary income and 500 renal income, you will want to create separate K-1s to report these out by category - resulting in two K-1s in this case.