K-1 carryover issue

[BrewOne]

Opened one of my most complex client's return and, without me doing anything, was already showing over $15k in the red.  Found on the 8949 an entry for:

Excess Distributions (K-1, 1065) $111,717

Looked at 2023 (K-1 attached) and found no anomalies, no incorrect entries.  Worksheets show nothing unusual and certainly not a six-figure carryover.

I know y'all might not have time right now, but thanks for looking.

K1Puzzle.pdf

[jklcpa]

If the carryover doesn't match anything you expected, I would go back to the 2023 program and look at what return it is now generating for this client that may be affecting the rollover of data.  Compare that return being generated to the return actually filed.  Perhaps there is an entry in the 2023 system that doesn't belong?

[Abby Normal]

Did you calculate partner basis?

Did you check to box on the K1 input to calculate basis?

[BrewOne]

thanks for the responses.  Yes, I looked at 2023, where I had calculated basis.  I don't see anything that would have generated the 8949 entry on 2024.  I'm going to treat it as a glitch.  I really like ATX but when you get into the weeds, it's just not as robust as the $20-30k programs.

[joanmcq]

I have one of these too!  I figured out where the gain was coming from; the program calculated gain on the reduction of qualified nonrecourse financing.  I was going to post here once I got the new K1 to figure out if the program was correct or not.  I don't know if it was a glitch or not; this taxpayer is dealing with huge amounts of investment in his partnerships.

This client has 5 partnerships that I did check 'calculate shareholder basis' and 'calculate at-risk'

[BulldogTom]

1 hour ago, joanmcq said:

the program calculated gain on the reduction of qualified nonrecourse financing. 

Bingo, when the first year of the 7203 basis worksheet came out, I had a devil of a time finding that box.

I would look at your debt basis entries and see if any "mysteriously" changed to $0.

Tom
Longview, TX

[BrewOne]

It doesn't help when you have to make entries on two K-1's--maybe I was working on the wrong K-1.

[Abby Normal]

16 hours ago, BrewOne said:

It doesn't help when you have to make entries on two K-1's--maybe I was working on the wrong K-1.

When I have two K1s, I make the basis worksheet on the 2nd K1 work out to zero each year, and maintain the actual basis on the main K1.

[joanmcq]

But don't they had two different investments, two different basises?

[Abby Normal]

3 hours ago, joanmcq said:

But don't they had two different investments, two different basises?

No, I was referring to one K1 with both ordinary income and rent income.  Those have to be entered as two separate K1s in ATX.

[Abby Normal]

11 hours ago, Abby Normal said:

When I have two K1s, I make the basis worksheet on the 2nd K1 work out to zero each year, and maintain the actual basis on the main K1.

For clarity, on the 2nd K1 you'll have an other increase or an other decrease to make it zero. So on the main K1, you'll need the opposite. If you have an other decrease on the 2nd K1, you'll need an equal other increase on the main K1. This represents the rental income.

[joanmcq]

Ah, ok.