Schedule K-1

Out of Scope:

  • All except Interest, Dividends, Capital Gains, Royalties and associated Foreign Tax Credits.
  • Royalties with expenses
  • Rent
  • Form 8865 (Foreign Partnerships)

Make sure that the K-1 is not associated with the client’s IRA! That would not go on their individual tax return.

Also, check the K-1 tax year period – it may not be Jan-to-Dec!

Tax Slayer entry:

Federal Section > Income > Other Income > K1 Earnings

  • Verify that all items are in scope based on the type of K-1 (see the samples above).
  • Entries carry across to the appropriate tax forms and schedules.
  • If a royalty is included, you will be prompted to create a Schedule E for it.

Entries with letter codes

Many foreign transaction letter code entries are required if foreign tax paid exceeds the $300/$600 limit which then requires Form 1116. As long as the Form 1116 is not required, these codes DO NOT put the Form K-1 out of scope.