This article will help you report partnership Schedule K-1, Line 13, codes T, U, and V, Domestic Production Activity in the individual module.
To enter Line 13, codes T, U, and V:
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Go to Screen 20, Passthrough K-1's.
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Select Partnership Information from the left menu.
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Scroll down to the Line 13 - Other Deductions section.
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Locate the All Domestic Production Activities Information subsection.
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Complete the following fields, if applicable, from the K-1 received for Line 13, code T:
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1= apply small business simplified overall method, 2= simplified deduction method
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Domestic production gross receipts
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Gross receipts from all sources
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Cost of goods sold allocable to DPGR
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Cost of goods sold from all sources
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Total deductions and losses directly allocable to DPGR
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Total deductions and losses directly allocable to non-DPGR class of income
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Other deductions and losses not directly allocable to DPGR or another class of income
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Form W-2 wages
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Enter the Qualified production activities income.
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Enter the Employers W-2 wages.
- If both entries from Step 6 and 7 are not made, a diagnostic will generate.
Form 8903 instructions indicate that if you use the small business simplified overall method or the simplified deduction method, you must use it for all activities, for example, Schedule C, Schedule F, and other K-1 activities.
To use the small business simplified overall method
The amount entered in Domestic Production Gross Receipts carries to Form 8903, Line 1, and Lacerte will combine amounts entered in the following fields, and carry the total to Form 8903, Line 4:
- Cost of goods sold from all sources
- Total deductions and losses directly allocable to DPGR
- Total deductions and losses directly allocable to a non-DPGR class of income
- Other deductions and losses not directly allocable to DPGR or another class of income.
If you elect to apply the small business simplified overall method, Lacerte aggregates the Domestic Production Gross Receipts with domestic production gross receipts from other trade or business activities, and divides that amount by the Gross Receipts From All Sources plus gross receipts from other trade or business activities.
The resulting ratio is then applied to all trade or business deductions including the ones indicated below:
- Cost of goods sold from all sources
- Total deductions and losses directly allocable to DPGR
- Total deductions and losses directly allocable to a non-DPGR class of income
- Other deductions and losses not directly allocable to DPGR or another class of income
To use the simplified deduction or the Section 861 method
Lacerte carries the Cost of goods sold allocable to DPGR, to Form 8903, Line 2, and all other deductions are carried to Form 8903, Line 3:
- Total deductions and losses directly allocable to DPGR
- Total deductions and losses directly allocable to a non-DPGR class of income
- Other deductions and losses not directly allocable to DPGR or another class of income
