Question

K-1 Box 20b Investment Expenses

Forum|Forum|3 years ago
March 23, 2023
2 replies
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@PatriciaV Hello. Could you help me with below question?

Is there any significance to Box 20b Investment Expenses being on K-1? What is the purpose of it?

Is it used on any other tax form, including 1040, for any kind of worksheet or testing for whether a tax benefit is available?

In my testing, I see that K-1 13d(L)-deductions-portfolio activates Box 20b,

BUT 13d(W)-other deductions does not activate Box 20b.

Is that correct?

I'm trying to decide between 13d(L) and 13d(W) for a particular deduction.

TurboTax Business Windows

hbl3973

Employee

TaxCat1,

For individual investors, investment expenses such as management fees, were a miscellaneous itemized deduction on Form 1040 Schedule A. (Brokerage commissions are already handled in the capital gains Schedule D and 8949 forms.) The 2017 tax changes eliminated that deduction through to their sunset at the end of 2025. Indeed IRS Publication 529 states:

Investment Fees and Expenses
Investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income are miscellaneous itemized deductions and are no longer deductible. Some remaining ones, though, are and that includes K-1 Box 13 L.

Some states, e.g. California, chose not to eliminate that deduction on their state income tax.

As to the effect of various boxes on a K-1(1065) the IRS Instructions tell us that 13-L goes on Schedule A, line 16 and 13-W may go several places depending on the details.

M

Mike9241

20b goes nowhere is really a recap of certain items reported on line 13L. the only significance of 13L, investment expenses, is if a taxpayer itemizes for state purposes or if they have investment interest expense 13H. then for purpose of limitation of the deductibility of 13H 13L is subtracted from investment income to come up with the limitation.