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Why is the gross income input in Screen 13 flowing to gross farming and fishing income (Box 17 AC) on Schedules K-1?

Level 2
 
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Level 15

I am going GUESS that you are referring to the 2020 

See page 22 of the shareholder instructions for the k-1 https://www.irs.gov/pub/irs-dft/i1120ssk--dft.pdf

Also list of codes on page 24

Code AC. Gross receipts for section 448(c) Use the gross receipts
amount to figure the business interest
expense you can deduct, if
applicable. See section 163(j) and the
Instructions for Form 8990 for details.


ex-AllStar

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11 Replies 11
Level 15

Why does your question not provide enough information to give an informed response? 


ex-AllStar
Level 2

I'm looking for help, not sarcasm, you xxxxxxx.

This question pertains to S corporation input, which you might have figured out if you'd looked at K-1's for both S corps and partnerships.

You've provided a supremely discouraging introduction to the Community.

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Level 15

We are not mind readers, although sometimes we try.

It is helpful to tell us the type of return you are preparing when you pose your question.


ex-AllStar
Level 2

Thank you for your courtesy.

This is an S corporation return.  The aggregate amounts showing in Box 17AC of the Schedules K-1 tie to gross receipts on Page 1, Form 1120S.  But I don't know why they appear there in the first place.  In the IRS instructions for Box 17AC, there are a number of references to obscure situations, none of which apply, in addition to "gross farming and fishing income", which does have a line in the K-1 input screen for Box 17AC.  But this is not a farming or fishing entity.  I double-checked the NAICS code, but it's correctly shown as the service business that it is.

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Level 15

I am going GUESS that you are referring to the 2020 

See page 22 of the shareholder instructions for the k-1 https://www.irs.gov/pub/irs-dft/i1120ssk--dft.pdf

Also list of codes on page 24

Code AC. Gross receipts for section 448(c) Use the gross receipts
amount to figure the business interest
expense you can deduct, if
applicable. See section 163(j) and the
Instructions for Form 8990 for details.


ex-AllStar

View solution in original post

Level 2

I've got the same problem as I believe the original question was referring to.   On my CPA firm 1120S K-1 it shows my gross income for the year on line 17 AC. When I input this into my individual return it shows that I owe self employment tax on my gross income. Line 17 AC has never appeared on a prior K-1 for my business.

I cannot see any override for line 17AC. Any advice would be appreciated.

Thanks

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Level 15

When I input this into my individual return it shows that I owe self employment tax on my gross income

Your input is wrong. And it appears the references in Screen 20 are also wrong. Since it is not net earnings from self-employment, don't enter it on that line.


ex-AllStar
Level 2

Wow, that was my exact problem!  Only, at that time, there was no input in the individual module for SE income; just gross income from farming and fishing (probably just a hobby for us CPA's!), and a couple of other rather obscure entries.

You can ignore the SE input line in the individual module; if you look carefully, you will see that the 17AC totals equal gross income on page 1, Form 1120S.  So it can't refer to net SE income directly.  (I'll admit that, when I first saw this addition to the individual input, I thought the game was finally over for all of us service businesses, but that's when I double-checked what numbers were going into 17AC.)

I've read, printed, and re-read pages 21-22 of the IRS Instructions for Schedule K-1 (Form 1120S), and it's clear that this is a catch-all box for items that need to be calculated for various obscure credits, and also a couple of items introduced by TCJA.  One of my responders made a reference to the need for this number to be available in those circumstances, and thus, its presentation on 17AC.  Like you, I'd seen nothing in that box ever before, certainly not for my garden variety Mom and Pop CPA firm, and started out assuming I'd made an input error.  I received a mixed bag of responses, most of which pointed out, in one way or another, my need to have been more specific in describing the origins of my question.  But, if only because my situation is the same as yours, or very nearly so, your question is clear to me.

My conclusion is that, for our purposes, this is an informational line that can be ignored, as we don't fit any of the situations described in detail in the IRS instructions.

Level 2

huskies 2014: Thanks for your original question and your follow up. It appears that the new treatment of investment interest expense by businesses is what is causing our problem.

This is how I resolved it for my firm: on the 1120S; input sheet #33; Other Information; Gross Receipts for Sec. 448(c) (AC) line, I entered a "-1".

That removed the 17AC code from my K-1. Now I'm happy. : )

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Level 15
We are not support. We are disinclined to go searching, just to understand the question. I hope your next experience on the community is better.

ex-AllStar
Level 2

OK, thanks.

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