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Entering 1040 domestic production amounts for Form 8903 from Schedule K-1 Partnership Worksheet

SOLVEDby IntuitProSeries BasicUpdated 1 month ago

This article will show you how to enter the domestic production information for Form 8903 when it's reported on the Schedule K-1 from a partnership in the Individual module of ProSeries.

 

The domestic production activities deduction has been repealed with the Tax Cuts and Jobs Act beginning in tax year 2018. The steps below only apply to tax year 2017 and prior. Refer to the IRS Instructions for Form 8903 for more information.

According to the IRS instructions for Form 1065, there are two methods to report domestic production information on the Schedule K-1, Line 13.

Method 1 - Using code T

One method is with code T with a note to see the statement attached to the Schedule K-1.  This statement contains additional information used to report the domestic production deduction at the partner level, such as:

  • Domestic production gross receipts (DPGR)
  • Gross receipts from all sources
  • Cost of goods sold allocable to DPGR
  • Cost of goods sold from all sources
  • Total deductions, expenses, and losses directly allocable to DPGR
  • Total deductions, expenses and losses directly allocable to a non-DPGR class of income
  • Other deductions, expenses and losses not directly allocable to DPGR or another class of income
  • W-2 wages properly allocable to DPGR or another class of income
  • Any other information a partner needs to use the section 861 method to allocate and apportion cost of goods sold and deductions between DPGR and other receipts

To enter the information for code T:

  1. From the Forms menu, choose Select Form (Find Form if using ProSeries Basic) to view the Open Forms window.
  2. Type the letter "P" to highlight the line labeled K-1 Partner and click OK to open the worksheet.
  3. Scroll down to Line 13 and select code T from the list of codes.
  4. Click the QuickZoom button to open a worksheet to enter additional information for codes R, T, U, and W.
  5. Scroll down to the section labeled Code T: Domestic production activities information.
  6. Enter the information included in the statement received by the taxpayer.

Method 2 - Using codes U and V

The second method is applicable only to eligible partnerships, who can choose to figure the Qualified Production Activities Income and Wages at the partnership level.  They report each using codes U and V on the Schedule K-1 Line 13:

  • Eligible section 861 partnerships
  • Eligible widely held pass-through partnerships
  • Eligible small pass-through partnerships
  • See the IRS instructions for Form 1065 for additional information regarding these types of partnerships

To enter the information for codes U and V:

  1. From the Forms menu, choose Select Form (Find Form if using ProSeries Basic) to view the Open Forms window.
  2. Type the letter "P" to highlight the line labeled K-1 Partner and click OK to open the worksheet.
  3. Scroll down to Line 13 and select code U from the list of codes and enter the amount of qualified production activities income.
  4. On the next available row, select code V from the list of codes and enter the amount of employer's W-2 wages.
  5. Click the QuickZoom button to open a worksheet to enter additional information for codes R, T, U, and W.
  6. Scroll down to the section labeled Code U: Domestic production activities income.
  7. Enter the amount of qualified production activities income from oil related sources, if any.

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