Understanding Lacerte diagnostic ref. 11807

The following informational diagnostic is triggered when the State K-1 Reconciliation Worksheet option has been suppressed and there are differences between the Federal K-1 amounts and the State K-1 amounts:

• "To reconcile federal and state differences from pass-through entities, turn on the State K-1 Reconciliation Worksheet. Enter a '1' in 'State K-1 Reconciliation Worksheet (1 = when applicable, 2 = Suppress) [O] (Code 90, Screen 3 Miscellaneous Information)' to generate the worksheet for this return. An entry in this input field overrides the default User Option. To change the State K-1 Reconciliation option to 'When Applicable' for all returns, select Options from the Settings menu then select the Tax Return tab. The option is located in the Federal Tax Options section." (ref. #11807)

To resolve the diagnostic

The State K-1 Reconciliation Worksheets will display: state amounts, federal amounts, and the total difference.

• If the amounts are accurate, you can disregard the State K-1 Reconciliation Worksheets.
• If the state and federal amounts should be the same, make the necessary modifications to the Passthrough K-1 inputs.
  • Use the Federal K-1 Reconciliation Worksheet and the State K-1 Reconciliation Worksheets to help you identify where the differences are.