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April 18, 2023
Question

continuous error flag for K1 "foreign transactions"

  • April 18, 2023
  • 1 reply
  • 0 views

Hi all.  My Turbo Tax (TT) federal review is down to one final error flag, but it is totally dumbfounding!  Here's the situation:

My wife owns a partial share in a family LLC that owns rental properties and provides a K-1.  The business has both ordinary business income and rental real estate income, requiring us to file as if we have two K-1s.  Although the business has no foreign source income, the company provides a K-3 as well.  Both K-1s have K1Ps (additional info).  

On one of the K1Ps (not certain whether its for the business or the rental income K-1), under Box 16, Foreign Source Income, the "partner level foreign income and expense" has three lines.  Line 3, "other expenses allocated at partner level," is divided into three columns: Total, U.S. Source, and Foreign source.  The dollar figure under Total is $593.  Since all forms of income were derived from U.S. sources, the full $593 is listed in the U.S. source column and the foreign source column has $0.  Seems correct.  However, TT keeps flagging the '0' in the third column as an error.  Any ideas why?

Thanks much,
Ken

1 reply

April 19, 2023

If there is no foreign source income or foreign taxes paid, you can leave the foreign income entries off of you K-1 entry and that may resolve your issue.

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