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Distributing Form 3800 credits to the beneficiaries of a 1041 return in ProConnect Tax

SOLVEDby IntuitUpdated 1 month ago

This article will help to understand why credits on Form 3800 are not passing to the beneficiary Schedule K-1's.

For tax year 2023, Form 3800 is undergoing a major IRS rewrite that expands the form to 8 pages. This form is still in development, pending a future release. Form 1120S and 1065 filers that require Form 3800 may want to consider filing extensions.

New for tax year 2023:

  • Pre-filing registration requirement. If you intend to make an elective payment election and/or a transfer election on Form 3800, you must complete a pre-filing registration before you file your tax return.
  • Elective payment election. Beginning with tax year 2023, certain applicable entities and electing taxpayers can elect to treat certain IRA 2022 business credits as elective payments. Certain eligible taxpayers can elect to treat CHIPS 2022 credits as elective payments. Any overpayments may result in refunds.
  • Transferring credits. Taxpayers may make an election to transfer all or a portion of certain IRA 2022 credits.
  • See IRS instructions for 3800 for more information.

Some credits from Form 3800 in the fiduciary module pass to the beneficiary Schedule K-1's, box 13, and others are applied against the fiduciary tax liability calculated on Form 1041, Page 2, Schedule G.

The Schedule K-1 codes page, or page 2, shows a list of codes for Box 13 Credits and Credit Recapture. These appear on the Schedule K-1 when not associated with Form 3800.

Any credit reported on the Form 3800 will be used to offset the fiduciary tax, if any, on Form 1041, Page 2.  If there's no tax liability on the Form 1041, the Form 3800 won't generate.

To generate the 3800:

  1. From the Input Return tab, go to Credits Other Credits and Withholding  Other Credits and Withholding.
  2. Go to the General Bus. Credits tab.
  3. Make any applicable inputs on this screen to generate the 3800.

To input to put credits directly on the Schedule K-1:

  1. From the Input Return tab, go to Sch. K-1  Schedule K-1 Overrides/Misc.
  2. Choose either Federal or the applicable state you want to override
  3. Make entries for any credits under Credits and Credit Recapture (13) section in the tab for each Beneficiary on this screen to override the amount on the K-1.

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