Issue with North Carolina Taxed Pass-Through Entity Income (New for 2022)

Forum|Forum|3 years ago
March 19, 2023
2 replies
0 views

I have a K-1 from my LLC S Corporation that has a value for "Taxed Pass-Through Entity Income (New for 2022)" since I paid state taxes via my LLC this year. I've entered this into Turbotax for my NC K-1 for "Share of North Carolina Taxable Income, if the amount is greater than zero", but when I look at the forms that Turbotax generates, that value is not getting filled out on line 38 of D400 Sch S (Page 2).

I do see another area outside of the K-1 called "Other Business Deductions From Income" and has a field for "Taxed Pass-Through Entity Income (New for 2022)" but it says "Do NOT enter Taxed Pass-Through Entity (PTE) Income from a North Carolina partnership, S corporation or fiduciary returns here. North Carolina PTE income can be found on your NC K-1 Supplemental Schedule, line 38, Taxed Pass-Through Entity Income and should be entered in the K-1 section."

Regardless, as a test, I added the value from my K-1 into that field, and when I inspect line 38 of D400 Sch S, it has the value I entered. But I'm hesitant to leave this since Turbotax said very explicitly that I should not enter the Taxed PTE this way.

Is this an issue with Turbotax, or am I misunderstanding something?

TurboTax Premier Online

Best answer by AnnetteB6

@AliciaP1 It's getting closer to the tax deadline. Do you have an ETA when the software will be corrected?

In order to have line 38 of the NC D-400 Schedule S show that the taxed PTE income is coming from a K-1, take the following steps.

As you go through your NC return, there will be a screen that says 'Tell Us About Your State Schedules K-1'. If you have already entered some information, click Edit beside the name of your K-1. This will take you to the screen titled, 'Shareholder's Share of North Carolina Income, Adjustments, and Credits'.

On this screen, the information states that the amounts entered on lines 1 through 10 do not transfer to other parts of the return, but that amounts entered in boxes 2, 3, 7, and 8 require additional information. This is where you will enter the information about the Box 3 deductions from income (loss) related to the taxed PTE income. Enter the amount of the taxed PTE income in box 3, along with any other applicable amounts. Click Continue.

If you have entered anything in boxes 2, 3, 7, or 8, an additional screen will come up for each box so that you can give the specific details. These amounts entered in the follow-up screen will be reported in other parts of the return as needed. Entering the taxed PTE income in line 38 will transfer that amount to the K-1 column of the D-400 Schedule S worksheet, then to the D-400 Schedule S.

taxick

I am having a similar problem on the S-Corporation return itself. Line 38 of the NC-PE is blank, which I believe is what is supposed to flow through to the K-1. I was on the phone with Turbotax for over an hour and their solution was to upgrade to "Live." I think it is a problem with the software. Anyone found a solution to this problem? Thanks for your help.

ncdevAuthor

I had the same experience - it seems they want me to pay to help them debug their software (though if it's something I'm just not understanding, I would be willing to pay).

AliciaP1

It would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue.

You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions:

In TurboTax Online, go to the black panel on the left side of your program and select Tax Tools.

Then select Tools below Tax Tools.
A window will pop up which says Tools Center.
On this screen, select Share my file with Agent.
You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.

In TurboTax CD/Download versions, go to the black panel on the top of your screen and select Online.

Scroll down to and select Send tax file to Agent.
You will see a message explaining what the diagnostic copy is.  Click send through this screen and then you will get a Token number.

Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@ncdev

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

suhargett

I can't find the "Other Business Deductions From Income" that you referred to in your post. I'm using Turbo Tax Deluxe is that the same one that you are using?

ncdevAuthor

@suhargett TurboTax Premium is what I'm using.

Your State Returns -> NC -> Income -> Other Business Deductions from Income -> Taxed Pass-Through Entity Income (New for 2022) Learn More

But as I mentioned, the "Learn More" says "Do NOT enter Taxed Pass-Through Entity (PTE) Income from a North Carolina partnership, S corporation or fiduciary returns here."

AliciaP1

Upon review of your token, there is an issue with the line reporting that we have reported to our tech team to correct. However, you can enter your Taxed Pass-Through Entity Income under Other Business Deductions from Income section (and ignore the Learn More recommendation at this time) to continue filing your return and not wait for the update.

@ncdev

@suhargett

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"