Entering a partnership Schedule K-1, line 20 in the Individual module

To enter Line 20, Code A:

1. Go to Screen 20, Passthrough K-1's.
2. Select the Partnership from the left navigation panel.
3. From the Sections select Line 20, 21 - Other
4. Enter the amount in (20A) Investment income.

Lacerte Considerations: Lacerte automatically computes the investment income from entries made in "Banks, Savings & Loans etc. (5)" (Screen 20.1, code 71), "U.S. Bonds, T-Bills (nontax. to state)(5)" (Screen 20.1, code 73), and "Ordinary Dividends (6a)" (Screen 20.1, code 74). Adjustments to this calculation can be made with entries in "Other Net Investment Income [A]" (Screen 20.1, code 98) or "Investment Income" (Screen 20.1, Code 856).

To enter Line 20, Code B:

1. Go to Screen 20, Passthrough K-1's.
2. Select the Partnership from the left navigation panel.
3. From the Sections select Line 20, 21 - Other
4. Enter the amount in (20B) Investment expenses.

Lacerte Considerations: Lacerte automatically computes the investment expenses from entries made in "Deductions Related to Portfolio Income (13)(G)" (Screen 20.1, code 26) automatically flow to Form 4952 line 5. This can be adjusted with an entry in "Investment expenses" (Screen 20.1, code 857).

To enter Line 20, Code C:

1. Go to Screen 36, Fuel Tax Credit (4136).
2. Enter all applicable information from 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 Screen 34, 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 Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. From the Sections select Investment Credit (3468)
9. Complete Part 1 for each Facility.
10. Scroll down to Part VII Rehabilitation Credit Under Section 47.
11. Enter the applicable information.

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

1. Go to Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. Scroll down to the Investment Credit (3468) section.
9. Locate the Rehabilitation Expenditures subsection
10. Enter the applicable Qualified rehabilitation expenditures.

Use this amount to complete Form 3468. Entries can be made on Screen 34, General Business and Vehicle Credits.

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

1. Go to Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. From the Sections select Investment Credit (3468)
9. Complete Part 1 for each Facility.
10. Scroll down to Part pertaining to this energy credit type. (See the chart below)
11. Enter the applicable information.

Available Sections

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

Report on Form 3468 lines 5a through 5q if the partnership's tax year began before October 4, 2008. Report on lines 11a through 11n if the partnership's tax year began after October 3, 2008.

1. Go to Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. Scroll down to the Investment Credit (3468) section.
9. Locate the Energy Credit subsection.
10. 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 Screen 34, General Business and Vehicle credits to properly compute Form 8611.

To enter Line 20, Code F:

1. Go to Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. Scroll down to the Recapture of Low-Income Housing Credit (8611) section.
9. Enter the applicable information.
10. Check the box, 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 Screen 34, General Business and Vehicle credits to properly compute Form 8611.

To enter Line 20, Code G:

1. Go to Screen 34, General Business and Vehicle Credits.
2. Click Add from the left navigation panel.
3. Locate the Credits section.
4. Click on the Form (Ctrl+T) drop down menu.
5. Select Schedule E (partnership).
6. Click on the Activity name or number (Ctrl+T) drop down menu.
7. Select the applicable activity.
8. Scroll down to the Recapture of Low-Income Housing Credit (8611) section.
9. Enter the applicable information.

Use this amount to compute Form 4255. Entries for this form can be found in the recapture section of Screen 45, Other Taxes

To enter Line 20, Code H:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll down to the Recapture Taxes section.
4. Locate the Recapture of Investment Credit subsection.
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 Screen 45, Other Taxes.

To enter Line 20, Code I:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll down to the Recapture Taxes section.
4. 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 for tax year 2023:

1. Go to Screen 34, General Business & Vehicle Credits
2. If this is related to a business activity, in the Credits section, enter the Form (Ctrl+T) using the dropdown, the Activity name or number (Ctrl+T), and Taxpayer, Spouse, or Joint (if applicable).
   • If this is not related to a business activity, continue to step 3.
3. Locate the Clean Vehicle Credit (8936) 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.
7. If using the new Elective Payment option for tax year 2023 use the new Elective Payment fields.
   • If filing an elective payment on the Form 3800 the IRS requires a registration number that you must complete before filing the tax return. See here for more information.

Additionally, make sure to review each blue note referenced on the page to determine whether or not it is applicable to your client.

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 Screen 85, Interest Computation/Look Back Method.
2. 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.

Lacerte Considerations: Manually complete form 8866. If interest is owed:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll all the way to the bottom of the screen.
4. Hold down Ctrl+E in, Other taxes (Ctrl+E).
5. Enter "From Form 8866" under the Description column.
6. Enter the Amount.
7. 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.

Lacerte Considerations: The sales information should be enter on Screen 17, Dispositions (Sch D/4797/etc). Note- If exporting the K-1 from the Partnership module, Lacerte will automatically create the property on Screen 17.  Only enter the information from Line 20, Code L manually if you are not exporting the K-1 from the Partnership module.

To enter Line 20, Code L:

1. Go to Screen 17, Dispositions.
2. Enter the applicable information regarding the sale:
   1. Description of Property
   2. Date acquired
   3. Date sold
   4. Sales price
   5. Cost or basis
3. Locate the Dispositions (Schedule D, 4797, etc.) section.
4. Check the box, Disposition from K-1 supplemental information.
5. Scroll down to the Form 4797 section.
6. Enter an amount or -1 in, Depreciation allowed (-1=none, triggers 4797).
7. 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).

Lacerte Considerations: Lacerte does not automate the computation of the 179 recapture. It has to be manually computed and entered on Screen 17, Dispositions. Enter the resulting income in either Other income & deductions - Passive (Screen 20.1 or 20.2 code 35) or Other income and deductions - nonpassive (Screen 20.1 or 20.2 code 1).

To enter Line 20, Code M:

1. Go to Screen 17, Dispositions.
2. Click on the Carryovers/Misc button or link from the left navigation panel.
3. Scroll down to the Form 4797 section.
4. Locate the Recapture 50% or Less Business Use subsection.
5. 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 Form 1040.

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

To enter Line 20, Code O:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll down to the Other Taxes section.
4. 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 Form 1040, line 61. Write "453A(c)" and the amount of the interest on the dotted line to the left of line 61. See Form 6252 instructions for more information. Also see section 453A(c) for more details on making the computation.

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

To enter Line 20, Code P:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll down to the Other Taxes section.
4. 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 by writing "1260(b)" and the amount of the interest to the left of the line for total taxes on Form 1040.

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

To enter Line 20, Code Q:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll all the way to the bottom of the screen.
4. Hold down Ctrl+E in, Other taxes (Ctrl+E).
5. Enter "Section 1260(b) interest" under the Description column.
6. Enter the Amount.
7. 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.

Lacerte Consideration: See regulations 1.263A-8 through 1.263A-15 for the amount that should be capitalized. Whether or not the result of this calculation needs to be entered in Lacerte depends upon the nature of the assets involved. If the assets are depreciable assets, the basis of depreciable assets entered on Screen 22, Depreciation 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 the federal return for a computation of both the tax and interest. Include the tax and interest by writing "CCF" to the left of the line for total taxes on Form 1040. See code section 7518(g)(4) and (6) for more information.

Lacerte Consideration: Manually prepare a statement showing the computation of the tax. Enter the results of this computation and the description "CCF" in Other Taxes.

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes from the top left navigation panel. (This will take you to Screen 45.3.)
3. Scroll all the way to the bottom of the screen.
4. Hold down Ctrl+E in, Other taxes (Ctrl+E).
5. Enter "CCF" under the Description column.
6. Enter the Amount.
7. 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 publication 535 for more information Lacerte considerations: 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 Screen 20, Passthrough K-1's.
2. Click on the Partnership from the left navigation panel.
3. Scroll down to the Oil & Gas section.
4. Enter the (20T) Cost depletion.
5. Enter the (20T) Percentage depletion.If you enter the depletion amounts here, there will not be a comparison for greater of cost or percentage depletion. Lacerte 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 are not 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 provide the partner with a statement identifying their share of the amortizable basis of reforestation expenditures paid or incurred before October 23, 2004. The partnership will separately report expenditures for 2001 through 2004. The taxpayer's amortizable basis for reforestation expenditures for each tax year from all properties is limited to $10,000 ($5,000 if married filing separately) including the taxpayer's distributive share of the partnership's expenditures and any qualified reforestation expenditures you separately paid or incurred. To figure the allowable amortization, see section 194 and publication 535. See Form 8582 if the amortization is from a passive activity.

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.

Lacerte Consideration: Individual taxpayers do not use this information so it does not have to be entered anywhere in Lacerte. To enter the amount as a memo only:

1. Go to Screen 20, Passthrough K-1's.
2. Click on the Partnership from the left navigation panel.
3. Scroll down to the Line 20 - Other section.
4. 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.

Lacerte consideration: Since the income was deferred, it has no effect on the current year federal tax return. Any adjustments for states that don't conform to federal tax law need to be entered manually in the state input screens. Starting in tax year 2014, these deferred amounts will be taxed. Enter the COD income and OID deductions on Screen 62, Discharge of Indebtesness in, Amount deferred in prior tax years (codes 53 and 54) in order for the program to proforma these amounts to next year, to be included in taxable income

In 2012 and prior years- Section 108(i) information - Enter the amount in the applicable field on Screen 20.1 Partnership Information under the Line 20 - Other section. There are 2 entries.

• Section 108(i) deferred cancelation of debt income - Enter the amounts of COD income and OID deductions in connection with a reacquisition in tax year 2009 of an applicable debt instrument for which the taxpayer elects to defer and include ratably in income over five taxable years beginning with fifth taxable year following the taxable year of the reacquisition. OID deductions are likewise included ratably over the same period. A number of states do not conform to this federal provision and require modification on the state returns. An entry here will be automatically included in the adjustment on these state returns.
• Section 108(i) deferred original issue discount deduction - Enter the amounts of COD income and OID deductions in connection with a reacquisition in tax year 2009 of an applicable debt instrument for which the taxpayer elects to defer and include ratably in income over five taxable years beginning with fifth taxable year following the taxable year of the reacquisition. OID deductions are likewise included ratably over the same period. A number of states do not conform to this federal provision and require modification on the state returns. An entry here will be automatically included in the adjustment on these state returns.

Net investment income - The partnership may use this code Y to report information you may need to determine your net investment income tax under section 1411, including information regarding income from controlled foreign corporations (CFCs) and passive foreign investment companies (PFICs) the stock of which is owned by the partnership. Any information that is not provided elsewhere on Schedule K-1 (or an attachment to Schedule K-1) is provided using code Y. 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-1, 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 adjusted gross income or modified adjusted gross income. 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 Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes. (This will take you to Screen 45.3.)
3. Scroll down to the Net Investment Income Tax (Form 8960) section.
4. Enter the amount in, Changes to investment income for CFCs and PFICs.

To enter Line 20Y for Section 1411:

1. Go to Screen 45, Other Taxes.
2. Click on Schedule J, Recapture, Other Taxes. (This will take you to Screen 45.3.)
3. Scroll down to the Net Investment Income Tax (Form 8960) section.
4. 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 Screen 17, Dispositions, in the section titled Disposition of Partnership Interest or S Corporation Stock.

An election under regulations Section 1.1411-10(g) can be made for the current year on Screen 46, Elections, Other Election.

1. Enter K-1 information for the applicable activity following your normal workflow.
2. Scroll down to Line 20 - Other
3. 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 are not 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 would not 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 is not accounted for elsewhere on the K-1 or in its attachments, you may need to enter the disposition information on screen 17.

Section 1(h)(5) gain or loss would be from collectibles.  If this is not accounted for elsewhere on the K-1 or in its attachments, you may need to enter the disposition information on screen 17.

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 is not required to calculate an individual's income or tax liability, so it does not need to be entered in Lacerte.