Facts:

LLC with investments in lower tier partnerships that has passed-through excess business interest (line 13k, Schedule K-1).  My Parent LLC fails the "substantial economic effect" tests for partner allocations of tax losses requiring a special allocation of losses to partners. As such, I need to allocate the pass-through excess business interest expense from these lower-tier partnerships in accordance with a ratio that does not match the partners interest in profits.

From my research, this item is allocated to partners using profit ratios, but that is not consistent with the "substantial economic effect" under IRC 704(b). I need to specially allocate this lower-tier pass-through amount, but I do not see an input area for this item in the Special Allocations screen 29.2

I can allocate Total Partnership Excess Business Interest Expense in Screen 29.2, "Deductions (Sch K-1, Boxes 12-13), but that does not address the allocation of the lower-tier pass-through. I have used the special allocation for excess business interest expense, however the lower-tier partnerships' amounts continue to show up on the Partner's Share of Investment in Passthrough Entities.

Looking for a workaround to clean this off the Partner's Share of Investment in Passthrough Entities form. Finding nothing on Screen 23 for the lower-tier partnerships K-1 input and nothing on Screen 29.2 that addresses this issue beyond total excess business interest.

Extremely complicated issue-any feedback would be appreciated.