To enter the income items from Schedule K-1 (Form 1065) in TaxSlayer ProWeb, from the Federal Section of the tax return (Form 1040) select:
- Income
- Other Income
- K-1 Earnings
- Schedule K-1 Form 1065 - Select the pencil icon to edit the K-1.
- Income
Part III - Partner's Share of Current Year
Income, Deductions, Credits, etc.
Actively Managed Passive Loss Carryover
$Enter here as a positive number the unallowed loss, if any, as shown on last year's Form 8582 Part VII column (c) for this entity. This amount will flow to Form 8582 to determine the amount allowed this year, if any.
Disposition Gain/Loss
$An entry here assumes the taxpayer has sold their interest in the partnership and you have checked the box in the Entity Information menu for "Entire Interest in Investment has been disposed". In the "Carry Gain/Loss to" menu below, if you have selected "Schedule D" the amount will automatically flow to Form 8949 as a long-term gain or loss and from there to Schedule D. If you have selected "Form 4797", you will need to make the entry in Form 4797.
Other Passive Loss Carryover
$Enter here as a positive number the unallowed loss, if any, as shown on last year's Form 8582 Part VII column (c) for this entity. This amount will flow to Form 8582 to determine the amount allowed this year, if any.
Carry Gain/Loss to
If the taxpayer sold their interest in the partnership, select Schedule D. If the partnership sold assets that had previously claimed the section 179 deduction and had passed it through to the partner (reported in Box 20 with code L), select Form 4797. If Form 4797, you will need to make the entry in Form 4797 using the information provided by the partnership regarding the asset(s) sold.
1 - Ordinary business income (Loss)
$The amount in Box 1 will be treated as passive if the check box for "This K-1 is from a passive entity" in the Entity Information menu is checked, otherwise it will be treated as nonpassive. Nonpassive income and loss flows to Schedule E, while passive income and loss flows to Form 8582 to determine the portion allowed to flow to Schedule E, if any.
2 - Net rental real estate income (loss)
$How the amount entered in Box 2 is treated depends on which of the two Box 2 check boxes in the Entity Information menu was checked, if any:
- "There is an amount on line 2 of the K-1 and this is a non-passive entity and you materially participate." - If this box is checked, the Box 2 income or loss will be reported on Schedule E.
- "There is an amount on line 2 of the K-1 and you actively participate." - The income or loss will be reported on Form 8582 to determine the allowed portion, if any.
- Neither box is checked - If neither of the two Box 2 check boxes is checked, the income or loss will flow to Form 8582 to determine the allowed portion, if any.
3 - Other net rental income (loss)
$The amount in Box 3 is a passive activity amount for all partners. If it's a loss, it will flow to Form 8582 Part V and be subject to passive activity limitations. If it's a gain, it will either flow to Form 8582 Part V if there are other similar losses, or it will flow to Schedule E Part II.
4A - Guaranteed payments for services
$Guaranteed payments for services are payments made by a partnership to a partner that are determined without regard to the partnership’s income. These amounts aren't generally passive income, and the amount entered flows to Schedule E line 28 column (k) as nonpassive income.
4B - Guaranteed payments for capital
$Guaranteed payments for capital are made for reasons other than for services, such as for the use of capital or attributable to section 736(a)(2) payments for unrealized receivables or goodwill. The amount entered flows to Schedule E line 28 column (k) as nonpassive income.
5 - Interest income
$Interest is portfolio income, and any amount entered here will flow to Schedule B.
6A - Ordinary dividends
$Dividends are portfolio income, and any amount entered here will flow to Schedule B.
6B - Qualified dividends
$Dividends are portfolio income, and any amount entered here will flow to Schedule B.
6C - Dividend equivalents
$Any amount reported here is for information only and is not reported on Form 1040. This information is provided for partners that aren’t U.S. persons, who are generally required to treat dividend equivalents as U.S. source dividends, and domestic partnerships with partners who may need this information.
7 - Royalties
$Royalties are portfolio income, and any amount entered here will flow to Schedule E Part I.
8 - Net short-term capital gain (loss)
$Capital gain/loss is portfolio income, and any short-term gain or loss flows to Schedule D Part I.
9A - Net long-term capital gain (loss)
$Capital gain/loss is portfolio income, and any long-term gain or loss flows to Schedule D Part II.
9B - Collectibles (28%) gain (loss)
$Collectibles gain/loss is portfolio income, and any amount entered flows to the 28% Rate Gain Worksheet and from there to Schedule D.
9C - Unrecaptured section 1250 gain
$Unrecaptured section 120 gain is portfolio income, and any amount entered flows to the Unrecaptured Section 1250 Gain Worksheet and from there to Schedule D.
10 - Net Section 1231 Gain (Loss)
$Net Section 1231 gain/loss is portfolio income. Section 1231 property is real or depreciable property owned for more than a year. Any gain or loss is reported on Form 4797 unless the amount is a loss and is indicated as passive, in which case it will be reported on Form 8582 Part V.
Check if the section 1231 gain(loss) is passive - Check this box if the taxpayer did not materially participate in the business activity that gave rise to the section 1231 gain or loss.
11 - Other income (loss)
11A - Other Portfolio Income (Loss)
The partnership held a residual interest in a real estate mortgage investment conduit (REMIC) and should have provided the partner with a statement showing the partner's share of taxable income (or net loss), excess inclusion, and section 212 expenses.
REMIC income (carries to schedule E line 38d)
$The amount entered will carry to Schedule E line 38(d).
Excess inclusion (carries to schedule E line 38c)
$The amount entered will carry to Schedule E line 38(c).
Section 212 expenses (carries to schedule E line 38e)
$The amount entered will carry to Schedule E line 38(e).
11B - Involuntary conversions
The amount entered is for reference purposes only and does not carry to any form. This amount represents the net gain (loss) from involuntary conversions due to casualty or theft. Report on Form 4684.
11C - Section 1256 contracts and straddles
This amount represents the gain or loss on section 1256 contracts marked to market. It will carry to Part I of Form 6781.
11D - Mining exploration costs recapture
The amount entered is for reference purposes only and does not carry to any form. The partnership will provide the taxpayer a statement that shows the information needed to recapture certain mining exploration costs. If the taxpayer has been deducting depletion from the mining activity, then the recapture amount needs to be entered as Other Income.
11E - Cancellation of debt
The amount entered carries to Schedule 1 line 8c as Other Income. Under section 108(b)(5) however, the taxpayer may elect to exclude any portion of this amount from gross income and reduce the the basis of depreciable property. See Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, for more details
11F - Section 743(b) positive income adjustments
The amount entered is for reference purposes only and does not carry to any form. This amount represents the net positive income adjustment resulting from all section 743(b) basis adjustments. The partnership will provide the partner their section 743(b) adjustment net of cost recovery at year end by asset grouping in box 20, code U.
11I - Gain (loss) from disposition of oil, gas, geothermal, or other mineral properties
The amount entered is for reference purposes only and does not carry to any form. Enter this on Form 4797. The K-1 should have a statement attached providing a description of the property, the taxpayer's share of the adjusted basis of the property (other than oil and gas), the amount realized from its disposition, and the taxpayer's share of intangible drilling costs, development costs, and mining exploration costs (section 59(e) expenditures) passed through for the property. Add these three costs to the adjusted basis if the taxpayer chose to capitalize them rather than deduct them.
11J - Recoveries of tax benefit items
The amount entered is for reference purposes only and does not carry to any form. Enter this under Other Income and from the dropdown menu select "Other Income", then enter a description (25 characters maximum), and the amount. A tax benefit item is an amount the taxpayer deducted in a prior tax year that reduced their income tax, so enter the amount to the extent it reduced tax in the prior year.
11K - Gambling gains and losses
The amount entered is for reference purposes only and does not carry to any form. How the gain or loss is entered depends on whether the partnership was engaged in the trade or business of gambling:
- If not engaged in the trade or business of gambling, enter gambling gains and losses both in "Other Gambling Income not reported on W-2G " under the Other Compensation menu. Winnings will be reported on Schedule 1 (Form 1040) line 8b, and the losses will be reported on Schedule A as an "other itemized deduction".
- If engaged in the trade or business of gambling, make one entry (if only winnings or losses is reported) or two entries (if both winnings and losses are reported) for the gambling activity in the "Schedule K-1 Form 1065" menu. Enter the amount of winnings and/or losses in Box 1 "Ordinary Business Income (Loss)".
11M - Gain eligible for section 1045 rollover (replacement stock purchased by the partnership)
The amount entered is for reference purposes only and does not carry to any form. Report on Form 8949. See the Schedule D instructions here under the heading "Rollover of Gain From QSB Stock" for information on how to enter. The partnership should have provided information about the gain, including the name of the corporation that issued the QSB stock, the taxpayer's share of the corporation's adjusted basis and sales price of the QSB stock, and the dates the QSB stock was bought and sold.
You'll need to ensure the taxpayer qualifies for the section 1045 rollover. There are two requirements:
- The taxpayer must have held an interest in the partnership during the entire period in which the partnership held the QSB stock (more than 6 months prior to the sale), and
- The taxpayer's share of the gain eligible for the section 1045 rollover can’t exceed the amount that would have been allocated to them based on their interest in the partnership at the time the QSB stock was acquired.
Otherwise the taxpayer can opt out of the partnership's section 1045 election and either (a) recognize the gain, or (b) elect to purchase different replacement QSB stock, either directly or through ownership of a different partnership that acquired replacement QSB stock.
11N - Gain eligible for section 1045 rollover (replacement stock not purchased by the partnership)
The amount entered is for reference purposes only and does not carry to any form. Report on Form 8949. See the Schedule D instructions here under the heading "Rollover of Gain From QSB Stock" for information on how to enter. The partnership should have provided information about the gain, including the name of the corporation that issued the QSB stock, the taxpayer's share of the corporation's adjusted basis and sales price of the QSB stock, and the dates the QSB stock was bought and sold.
You'll need to ensure the taxpayer qualifies for the section 1045 rollover. There are three requirements:
- The taxpayer must have held an interest in the partnership during the entire period in which the partnership held the QSB stock,
- The taxpayer's share of the gain eligible for the section 1045 rollover can’t exceed the amount that would have been allocated to them based on their interest in the partnership at the time the QSB stock was acquired, and
- They must purchase other QSB stock (as defined in the Instructions for Schedule D (Form 1040)) during the 60-day period that began on the date the QSB stock was sold by the partnership.
Otherwise the taxpayer can opt out of the partnership's section 1045 election and either recognize the gain.
11O - Sale or exchange of QSB stock with section 1202 exclusion
The amount entered is for reference purposes only and does not carry to any form. Report on Form 8949. See the Schedule D instructions here under the heading "Exclusion of Gain on Qualified Small Business (QSB) Stock" for information on how to enter. The partnership should have provided information including the name of the corporation that issued the QSB stock, the taxpayer's share of the corporation's adjusted basis and sales price of the QSB stock, and the dates the QSB stock was bought and sold. You'll need to ensure the taxpayer qualifies for the exclusion.
11P - Gain or loss on disposition of farm recapture property & items to which section 1252 applies
The amount entered is for reference purposes only and does not carry to any form. The partnership should have provided to the partner information on gains from the disposition of farm recapture property and other items to which section 1252 applies. See the instructions for Form 4797 Part III line 27 for information needed to determine the entry to make, if any.
11Q - Gain or loss on Fannie Mae or Freddie Mac qualified preferred stock
The amount entered is for reference purposes only and does not carry to any form. The partnership should have provided to the partner a statement on the gain or loss attributable to the sale or exchange of qualified preferred stock of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The statement should include the amount of gain or loss attributable to the sale or exchange of the qualified preferred stock, the date the stock was acquired by the partnership, and the date the stock was sold or exchanged by the partnership.
If short-term, report it in Box 8, adding to the amount already there, if any. If long-term, report it in Box 9a, adding to the amount already there, if any.
11R - Specially allocated ordinary gain (loss)
The amount entered is for reference purposes only and does not carry to any form. It represents gain or loss allocated to the partner in a manner different than the partner's percentages of gain or loss. Report on Form 4797 under Part II - Property held less than one year.
11S - Non-portfolio capital gain (loss)
The amount entered is for reference purposes only and does not carry to any form. It represents an amount of short- or long-term capital gain or loss that isn't portfolio income. For example, gain or loss from the disposition of nondepreciable personal property used in a trade or business activity of the partnership. If short-term, report it in Box 8, adding to the amount already there, if any. If long-term, report it in Box 9a, adding to the amount already there, if any.
11ZZ - Other income (loss)
The amount entered is for reference purposes only and does not carry to any form. You will need to refer to the statement the partnership provided regarding the nature of this income to determine where it should be entered in the return.
12 - Section 179 Deduction (in this menu 2024 and prior)
$The amount of Section 179 deduction the taxpayer is allowed to deduct is subject to the dollar limitation and the business income limitation. You will need to calculate the amount the taxpayer is allowed to deduct, and if it's less than the amount on the K-1 enter only the allowed amount. The amount entered will flow to Schedule E line 28 column (j).
Note: This is a brief guide on entering boxes 1 through 11 of Schedule K-1 (Form 1065) into TaxSlayer ProWeb. This is not intended as tax advice.
Additional Information:
IRS: Shareholder's Instructions for Schedule K-1 (Form 1065)
ProWeb: Form 1040 - Schedule K-1 (Form 1065) - Overview
ProWeb: Form 1040 - Schedule K-1 (Form 1065) - Entity Information
ProWeb: Form 1040 - Schedule K-1 (Form 1065) - Other Deductions
ProWeb: Form 1040 - Schedule K-1 (Form 1065) - Credit and Other Information