Accepted Answer

Greetings,

1 - $8 Report on Schedule E, line 28, column (g).

8c - $5 Report on Schedule D (Form 1040), line 5, column (f).

9 - $118 Report on Schedule D (Form 1040), line 12, column (f).

11 - 1 The partnership should give you a description and the amount of your share for each of these items. Without a code this might just be added to the Schedule E, line 28, column (g)amount from box 1.

12 - P* STMT

14 - O - 29 Not sure why you have the O; but Box 14 is self employment earnings which would be not applicable to your passive investment (Many software programs will allocate this to all partners even when it does not apply, in my experience)


16 - B* - 1 Codes A through N apply to the foreign tax credit. Since the amount is $1 rather than even take the effort (and charge my client) the practical way to deal with this is just forego the possible $1 credit. If you really want to claim the $1 see Form 1116 or just list the $1 on From 1040, line 47.

From the instructions at http://www.irs.gov/instructions/i1065sk1/ch02.html#d0e1352

"Codes O and P. Extraterritorial income exclusion.    
Partnership did not claim the exclusion. If the partnership reports your distributive share of foreign trading gross receipts (code O) and the extraterritorial income exclusion (code P), the partnership was not entitled to claim the exclusion because it did not meet the foreign economic process requirements. You may still qualify for your distributive share of this exclusion if the partnership's foreign trading gross receipts for the tax year were $5 million or less. To qualify for this exclusion, your foreign trading gross receipts from all sources for the tax year also must have been $5 million or less. If you qualify for the exclusion, report the exclusion amount in accordance with the instructions for Income (Loss) on page 6 for box 1, 2, or 3, whichever applies. See Form 8873, Extraterritorial Income Exclusion, for more information.

Partnership claimed the exclusion. If the partnership reports your distributive share of foreign trading gross receipts but not the amount of the extraterritorial income exclusion, the partnership met the foreign economic process requirements and claimed the exclusion when figuring your distributive share of partnership income. You also may need to know the amount of your distributive share of foreign trading gross receipts from this partnership to determine if you met the $5 million or less exception discussed above for purposes of qualifying for an extraterritorial income exclusion from other sources."

Since you have Code O and not Code P the partnership has already claimed the exclusion when figuring your share of partnership income so no entry is needed.


16D - 126 This is the foreign income on which the 16B $1 credit is being claimed.

Form 8903 is used to claim the Domestic Production Activities Deduction See the form at http://www.irs.gov/pub/irs-pdf/f8903.pdf but it may not be worth the effort since you have a total of $9 ordinary income and $123 of capital gain to report from the partnership. This credit is limited to 1/2 of the wages which in your case is a possible maximum $10 or $11 deduction on line 35 of Form 1040. So, you could potentially eliminate the $9 of ordinary income with this deduction. Since tax tables are set to use every $50 there could be no change in your tax or it could result in about $8 or $14 of additional tax depending on your tax bracket.
There is no penalty for not claiming the deeduction. Otherwise follow Form 8903 line descriptions to enter each of those amounts and compute the credit.

I hope this helps for entry of the K-1 amounts to your return even though some of the amounts may not be worth the effort it would take to get a credit or deduction.

Please ask if you need additional assistance.
Best regards.

Expert:	John Gordos EA
Pos. Feedback:	99.8 %
Accepts:
Answered:	9/11/2009

Enrolled Agent

I have prepared individual, trust, partnership, and corporate taxes since 1987.