How to enter K-1 Line 20 Code N in 1065 passthrough K-1?

[ddiehr]

I have a K-1 from a passthrough entity and There is nowhere to enter Line 20 Code N.

[PhoebeRoberts · Accepted solution]

You need to manually determine whether any adjustment related to that amount applies.

Code N. Business interest expense.

For tax years beginning after November 12, 2020, the partnership will report your share of the partnership's deductible business interest expense for inclusion in the separate loss class for computing any basis limitation (defined in section 704(d), Regulation section 1.163(j)-6(h)). This information is necessary if your losses are limited under section 704(d). Deductible business interest expense is reported elsewhere on Schedule K-1 and the total amount is reported here for information only and was already included as a deduction on another line of your schedule K-1. Included in the code N information is a statement providing the allocation of the business interest expense already deducted by the partnership by line number in the Schedule K-1.

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The partner must remove the business interest expense deductions from these referenced lines when computing any basis limitation..

Any excess business interest expense not deductible under section 163(j) will be included in box 13, code K, for inclusion in the basis limitation and is not reported here. See Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership for additional information about computing the loss limitation.

[ddiehr]

Thank you!