Entering a partnership Schedule K-1, line 20 in ProConnect Tax

To enter Line 20, Code A:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Passthrough K-1's.
3. Select Partnership Info. (1065 K-1).
4. From the top of the screen, select Lines 11-20.
5. Scroll down to the Line 20 - Other section.
6. Enter the amount in (20A) Investment income.

To enter Line 20, Code B:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Passthrough K-1's.
3. Select Partnership Info. (1065 K-1).
4. From the top of the screen, select Lines 11-20.
5. Scroll down to the Line 20 - Other section.
6. Enter the amount in (20B) Investment expenses.

To enter Line 20, Code C:

1. Go to the Input Return tab.
2. From the left of the screen, select Credits and choose Fuel Tax Credit (4136).
3. Enter all applicable information the Schedule K-1, Partner's Share of Credit for Federal Tax Paid on Fuels Statement.

The partnership will report your share of the qualified rehabilitation expenditures and other information you need to complete Form 3468 for property not related to rental real estate activities in box 20 using code D. Your share of qualified rehabilitation expenditures from property that is related to rental real estate activities is reported in Box 15, using code E. See Form 3468 for details. If the partnership is reporting expenditures from more than one activity, the attached statement will separately identify the amount of expenditures from each activity. Combine the expenditures from Box 15 Code E and Box 20 Code D when making entries on the General Business and Vehicle Credits to complete the Form 3468. The amount of qualified rehabilitation expenditures for rental real estate is reported separately, because they are subject to different passive activity limitation rules. See the Form 8582-CR for details.

To enter Line 20, Code D in tax year 2023

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr
2. Select the Investment & Research tab.
3. Complete Part 1 for each Facility.
   • Additional locations can be added with the + button.
4. Scroll down to Part VII Rehabilitation Credit Under Section 47.
5. Enter the applicable information.

To enter Line 20, Code D in tax year 2022 and prior:

1. Go to the Input Return tab.
2. From the left of the screen, select Credits and choose General Business and Vehicle Cr.
3. Scroll down to the Credits section.
4. Click the Form (Click on arrow to select from list) field and choose Schedule E (partnership).
5. Select the applicable Activity.
6. From the top of the screen, select Investment & Research.
7. Locate the Investment Credit (3468) section.
8. Scroll down to the Rehabilitation Expenditures subsection.
9. Enter the applicable Qualified rehabilitation expenditures.

Use this amount to complete Form 3468. Entries can be made on the General Business and Vehicle Credits screen. If the partnership provides an attached statement for code E, use the information on the statement to complete the applicable energy credit on Form 3468.

To enter Line 20, Code E for tax year 2023:

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr
2. Select the Investment & Research tab.
3. Complete Part 1 for each Facility.
   • Additional locations can be added with the + button.
4. Scroll down to Part pertaining to this energy credit type. (See the chart below)
5. Enter the applicable information.

Available Sections

To enter Line 20, Code E for tax year 2022 and prior:

1. Go to the Input Return tab.
2. From the left of the screen, select Credits and choose General Business and Vehicle Cr.
3. Scroll down to the Credits section.
4. Click the Form (Click on arrow to select from list) field and choose Schedule E (partnership).
5. Select the applicable Activity.
6. From the top of the screen, select Investment & Research.
7. Locate the Investment Credit (3468) section.
8. Locate the Energy Credit subsection.
9. Enter the applicable Basis of energy property.

The amount of low-income housing credit that must be recaptured is reported with Code F by section 42(j)(5) partnerships while all other partnerships use code G. Enter these amounts on the General Business and Vehicle Credits screen to properly compute Form 8611.

To enter Line 20, Code F:

1. Go to the Input Return tab.
2. From the left of the screen, select Credits and choose General Business and Vehicle Cr.
3. Scroll down to the Credits section.
4. Click the Form (Click on arrow to select from list) field and choose Schedule E (partnership).
5. Select the applicable Activity.
6. Click the three dots at the top of the screen and choose Low Income Housing.
7. Scroll down to the Recapture of Low-Income Housing Credit (8611) section.
8. Enter the applicable information.
9. Mark the checkbox labeled Section 42(j)(5) partnership.

The amount of low-income housing credit that must be recaptured is reported with Code F by section 42(j)(5) partnerships while all other partnerships use code G. Enter these amounts on the General Business and Vehicle Credits screen to properly compute Form 8611.

To enter Line 20, Code G:

1. Go to the Input Return tab.
2. From the left of the screen, select Credits and choose General Business and Vehicle Cr.
3. Scroll down to the Credits section.
4. Click the Form (Click on arrow to select from list) field and choose Schedule E (partnership).
5. Select the applicable Activity.
6. Click the three dots at the top of the screen and choose Low Income Housing.
7. Scroll down to the Recapture of Low-Income Housing Credit (8611) section.
8. Enter the applicable information.

Use this amount to compute Form 4255. Entries for this form can be found in the recapture section of the Other Taxes screen.

To enter Line 20, Code H:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Recapture Taxes section.
5. Enter the amount in one of the applicable fields.

Other credits that may be recaptured can be entered in the recapture taxes section of the Other Taxes screen.

To enter Line 20, Code I:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Recapture Taxes section.
5. Enter the amount in one of the applicable fields:
   • Recapture of federal mortgage subsidy (8828)
   • Recapture of qualified electric vehicle credit (8834)
   • Recapture of Indian employment credit (8845)
   • Recapture of new markets credit (8874)
   • Recapture of employer-provided child care facilities credit (8882)
   • Recapture of alternative motor vehicle credit (8910)
   • Recapture of alternative fuel vehicle refueling property credit (8911)
   • Recapture of qualified plug-in electric drive motor vehicle credit (8936)

New for Form 8936 for tax year 2023:

• A new clean vehicle credit for new electric vehicles meeting specific requirements
• A credit for previously owned clean vehicles
• A credit for qualified commercial clean vehicles

Tax-exempt and governmental entities may also elect to treat their credits as a payment of income tax. However, credit for plug-in electric-drive motor vehicles is no longer available for vehicles placed in service after 2022 and final assembly of the vehicle must occur within North America for vehicles purchased after August 16, 2022. See here for more details.

How to Generate Form 8936

1. Go to Schedule K, Credits, then Other Credits
2. If this is related to a business activity, in the Credits section, enter the Form  using the dropdown, or the Activity name or number.
   • If this is not related to a business activity, continue to step 3.
3. Locate the Qualified Plug-In Electric Drive Motor Vehicle Credit section on the lower left panel, or by scrolling down.
4. Begin by entering the Part I: Vehicle Details.
5. Continue by answering the questions presented on Screen 34 in order.
6. Follow the directions on the input screen until you complete the input and generate the form, or until you see Stop here which indicates the vehicle doesn't qualify for a credit. 
   • If Part II is needed, an entry is required for tentative credit amount to generate the form.

The partnership will report any information you need to figure the interest due or to be refunded under the look-back method of section 460(b)(2) on certain long-term contracts. Use Form 8697- Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, to report any such interest.

To enter Line 20, Code J:

1. Go to the Input Return tab.
2. From the left of the screen, select Miscellaneous Forms and choose Int. Comp/ Look-Back Method (8697).
3. Enter the applicable information from the Schedule K-1 statement.

The partnership will report any information you need to figure the interest due or to be refunded under the look-back method of section 167(g)(2) on certain property placed in service after September 13, 1995 and depreciated under the income forecast method. Use Form 8866 - Interest Computation Under the Look-Back Method for Property Depreciated Under the Forecast Method, to report any such interest.

Manually complete form 8866. If interest is owed:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll all the way to the bottom of the screen.
5. Click in the field Other taxes (Click on button to expand).
6. Enter "From Form 8866" under the Description column.
7. Enter the Amount.
8. Click OK.

When the partnership sales or disposes of an asset on which section 179 expense was previously taken, it does not report the resulting gain or loss on the partnership return. Instead, it passes out the information needed to compute the gain or loss to each partner. This information should be used to report the gain or loss on the partner's tax return.

The sales information should be enter on the Sch D/4797/etc. screen. If exporting the K-1 from the Partnership module, the program will automatically create the property on the Sch D/4797/etc. screen. Only enter the information from Line 20, Code L manually if you're not exporting the K-1 from the Partnership module.

To enter Line 20, Code L:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Dispositions (Sch D, etc.).
3. Select Schedule D/4797/etc.
4. Locate the Dispositions (Schedule D, 4797, etc.) section.
5. Enter the applicable information regarding the sale:
   • Description of Property
   • Date acquired
   • Date sold
   • Sales price
   • Cost or basis
6. Mark the checkbox labeled Disposition from K-1 supplemental information.
7. From the top of the screen, select Sale of Asset 4797, 6252.
8. Locate the Form 4797 section.
9. Enter an amount or -1 in Depreciation allowed (-1=none, triggers 4797).
10. Enter the Prior Section 179.

The partnership will report the distributive share of any recapture of section 179 expense if business use drops below 50%. The partnership will report to the partner their distributive share of depreciation allowed or allowable (not including 179 expense) and the partner's distributive share of section 179 expense passed through for the property and the year the amount was passed through. The amount of 179 expenses should be reduced by any unused section 179 expense (carryover).

ProConnect Tax doesn't automate the computation of the 179 recapture. It has to be manually computed and entered on the Dispositions screen. Enter the resulting income in either Other income & deductions - Passive or Other income and deductions - nonpassive.

To enter Line 20, Code M:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Dispositions (Sch D, etc.).
3. Select Schedule D/4797/etc.
4. Click the blue Carryovers/Misc link in the top right of the screen.
5. From the top of the screen, select 4797 Carryovers & Recap.
6. Under the Form 4797 section, locate the Recapture 50% or Less Business Use subsection.
7. Enter the Section 179 expense deduction.

The partnership will report each corporate partner's distributive share of the partnership's interest expense. This amount is reported elsewhere on Schedule K-1 and the total amount is reported here for information only. The distributive share of interest income is reported in Box 5 and the share of partnership liabilities is reported in Part II, Item K.

The partnership will report to you any information you need to figure the interest due under section 453(l)(3) with respect to the disposition of certain timeshares and residential lots on the installment method. If you are an individual, report the interest by writing "453(l)(3)" and the amount of the interest to the left of the line for total taxes on Schedule 2 (Form 1040), line 14.

See code section 453(l)(3) for how to compute the interest due.

To enter Line 20, Code O:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Other Taxes section.
5. Enter the Section 453(I)(3).

The partnership will report any information you need to figure the interest due under section 453(A)(c) with respect to certain installment sales. If you are an individual, report the interest on Schedule 2 (Form 1040), line 15. Write "453A(c)" and the amount of the interest on the dotted line to the left of line 15. See Form 6252 instructions for more information. Also see section 453A(c) for more details on making the computation.

See code section 453A(c) for how to compute the interest due.

To enter Line 20, Code P:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Other Taxes section.
5. Enter the Section 453(A)(C).

The partnership will report to you any information you need to figure the interest due under section 1260(b). If the partnership had gain from certain constructive ownership transactions, the taxpayer's tax liability must be increased by the interest charge on any deferral of gain recognition under section 1260(b). Report the interest on Schedule 2 (Form 1040), line 17z. Enter “1260(b)” and the amount of the interest in the space to the left of line 17z.

See code section 1260(b) for how to compute the interest due.

To enter Line 20, Code Q:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll all the way to the bottom of the screen.
5. Click in the field Other taxes (Click on button to expand).
6. Enter "Section 1260(b) interest" under the Description column.
7. Enter the Amount.
8. Click OK.

The partnership will report any information the taxpayer needs relating to interest expense that is required to be capitalized under section 263A for production expenditures. See regulations 1.263A-8 through 1.263A-15 for more information.

See regulations 1.263A-8 through 1.263A-15 for the amount that should be capitalized. Whether the result of this calculation needs to be entered in ProConnect Tax depends upon the nature of the assets involved. If the assets are depreciable assets, the basis of depreciable assets entered on the Depreciation screen may need to be increased.

The partnership will report to the partner their share of the partnerships nonqualified withdrawals from a capital construction fund (CCF). These withdrawals are taxed separately from other gross income at the highest marginal ordinary income or capital gains tax rate. Attach a statement to your federal income tax return to show your computation of both the tax and interest for a nonqualified withdrawal. Include the tax and interest on Schedule 2 (Form 1040), line 17z. In the space to the left of line 17z, enter the amount of tax and interest and “CCF.” See code section 7518(g)(4) and (6) for more information.

Manually prepare a statement showing the computation of the tax. Enter the results of this computation and the description "CCF" on the Other Taxes screen.

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll all the way to the bottom of the screen.
5. Click in the field Other taxes (Click on button to expand).
6. Enter "CCF" under the Description column.
7. Enter the Amount.
8. Click OK.

This is the partner's share of gross income from the property, share of production for the year, etc. needed to figure the partner's depletion deduction for oil and gas. The partnership should also have allocated to the partner their share of the adjusted basis of each partnership oil and gas property. See IRS Pub. 535 for more information.

How you enter the depletion information depends upon how the much detail you have from the partnership. If the partnership provided you with property-by-property detail of the oil and gas activities, use #2 below. If such detail is not provided, then please proceed to #1 below.

Solution #1 - Entering Oil and Gas on the passthrough K-1 screen:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Passthrough K-1's.
3. Select Partnership Info. (1065 K-1).
4. From the top of the screen, select Lines 11-20.
5. Scroll down to the Oil & Gas section.
6. Enter the (20T) Cost depletion.
7. Enter the (20T) Percentage depletion.
   • If you enter the depletion amounts here, there won't be a comparison for greater of cost or percentage depletion. ProConnect Tax assumes that the amounts entered have already been compared on the Partnership return. When entering the depletion, be sure to enter the AMT Depletion amounts as well, they aren't assumed to be equal to the regular tax amount.

If the K-1 is a passive activity, then the depletion will be subjected to the passive limitations. If you have any percentage depletion amounts that were suspended in prior years because of the passive limits, enter them in Prior unallowed passive percentage depletion.

After the passive limits have been applied, the 65% taxable income limitation is applied to percentage depletion. If you have any amounts that were disallowed in a prior year because of the 65% limitation, enter them in Depletion carryover.

For all the carryovers amounts mentioned above, be sure to also enter the AMT version of the carryover as well.

Solution #2 - See Entering Oil and Gas Information.

The partnership will report any information needed to figure unrelated business taxable income under section 512(a)(1). This information is only relevant to tax-exempt organizations. Individual taxpayers can disregard the information.

Individual taxpayers don't use this information, so it doesn't have to be entered anywhere in ProConnect Tax. To enter the amount as a memo only:

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Passthrough K-1's.
3. Select Partnership Info. (1065 K-1).
4. From the top of the screen, select Lines 11-20.
5. Scroll down to the Line 20 - Other section.
6. Enter the amount in, (20V) Unrelated business taxable income- UBTI (memo only).

The partnership will attach a statement providing the amount of the partner's precontribution gain (loss) and identifying the character of the gain (loss) (for example, capital gain (loss) or section 1231 gain (loss)). Report the precontribution gain or loss on Schedule D or Form 4797 in accordance with the information provided by the partnership.

The partnership may use this code Y to report information you may need to determine your net investment income tax under section 1411 that is not reported elsewhere on the Schedule K-1 or K-3. Code Y is used to report information not provided elsewhere on Schedule K-3 (or an attachment) regarding income from CFCs and passive foreign investment companies (PFICs) the stock of which is owned by the partnership.

For CFCs and PFICs that you treat as qualified electing funds (QEFs), the information that is relevant to you will depend on whether you, the partnership, or a lower-tier entity has made an election under Regulations section 1.1411-10(g) with respect to the CFC or QEF. For example, if the partnership made an election under Regulations section 1.1411-10(g) for a CFC the stock of which is owned by the partnership, and the relevant income and deduction items derived from that CFC are reported elsewhere on the Schedule K-3, then you will not need the information provided in code Y to complete your Form 8960.

If you are an individual who is a U.S. citizen or resident, or a domestic trust or estate, follow the Instructions for Form 8960 to figure and report your net investment income and AGI or MAGI. Corporate partners are not subject to the net investment income tax. See Regulations sections 1.1411-1 through -10 for details.

To enter Line 20Y changes to investment income for CFCs and PFICs:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Net Investment Income Tax (Form 8960) section.
5. Enter the amount in Changes to investment income for CFCs and PFICs.

To enter Line 20Y for Section 1411:

1. Go to the Input Return tab.
2. From the left of the screen, select Taxes and choose Other Taxes.
3. Select Schedule J, Recapture, Other Taxes.
4. Scroll down to the Net Investment Income Tax (Form 8960) section.
5. Enter the amount in Domestic production activities deduction attributable to a Section 1411 business.

Information related to the disposition of a Partnership interest or S Corporation stock (Form 8960, line 5c) should be entered on the Dispositions screen, in the Disposition of Partnership Interest or S Corporation Stock section.

An election under regulations Section 1.1411-10(g) can be made for the current year on the Elections screen, in the Other Election section.

1. Go to the Input Return tab.
2. From the left of the screen, select Income and choose Passthrough K-1's.
3. Select Partnership Info. (1065 K-1).
4. Enter K-1 information for the applicable activity following your normal workflow.
5. From the top of the screen, select Lines 11-20.
6. Scroll down to the Line 20 - Other section.
7. Fill in the Section 199A grid with the information provided on your K-1.
   • If you don’t see the field you’re looking for, scroll to the right.

These input fields aren't overrides. The program assumes this activity qualifies when entries are made within this input section.

Entries into this field show adjustments to the partners' capital account and wouldn't need to be entered into the individual return.

751 gain or loss is recharacterization of gain or loss from the sale of Partnership Interest from Capital Income to Ordinary Income. If this isn't accounted for elsewhere on the K-1 or in its attachments, you may need to enter the disposition information on the Dispositions screen.

Section 1(h)(5) gain or loss would be from collectibles. If this isn't accounted for elsewhere on the K-1 or in its attachments, you may need to enter the disposition information on the Dispositions screen.

Amounts here represent the business interest that was subject to a business interest limitation at the partnership level. This is informational for the individual return.

Reports gross receipts subject to the base erosion tax. This amount isn't required to calculate an individual's income or tax liability, so it doesn't need to be entered in ProConnect Tax.