ProConnect HelpIntuit HelpIntuit

How to enter specially allocated depreciation in a 1065

SOLVEDby IntuitLacerte Tax117Updated July 14, 2022

This article will help you enter section 754 or section 743(b) basis adjustments, or other depreciation and allocate it to partners.

To enter specially allocated depreciation:

  1. Go to Screen 14, Depreciation.
  2. Select an existing asset or click on Add from the left navigation panel.
  3. Enter all applicable information in the entry grid.
    • Take note of the Form you select. Only depreciable assets sent to the following forms can be specially allocated:
      • 3=Form 8825, Rental Real Estate
      • 5=Rental other than Real Estate
      • 6=Form 1065, Schedule K
  4. Select the appropriate allocation type from the Special allocation (Ctrl+T) drop down menu:

Once these entries have been made on the depreciation screen, you'll to specially allocate the step-up in basis to partners.

To specially allocate the depreciation:

Go to Screen 29, Special Allocations. Then, follow the steps below for the form you linked the depreciable asset to.

Follow these steps if you selected 3=Form 8825:

  1. Click on the Income folder to expand it.
  2. Select the Rental Real Estate folder.
  3. Click on the Specially Allocated Depreciation folder.
  4. Select the type of specially allocated depreciation (Section 754, 743b, or Other item).
  5. Allocate the amount to the partners.

Follow these steps if you selected 5=Rental Other than Real Estate:

  1. Click on the Income folder to expand it.
  2. Select the Other Rental Activities folder.
  3. Click on the Specially Allocated Depreciation folder.
  4. Select the type of specially allocated depreciation (Section 754, 743b, or Other).
  5. Allocate the amount to the partners.

Follow these steps if you selected 6=Form 1065, Schedule K:

  1. Click on the Deductions folder to expand it.
  2. Select the Other Deductions folder.
  3. Click on the Specially Allocated Depreciation folder.
  4. Select the type of specially allocated depreciation (Section 754, 743b, or Other).
  5. Allocate the amount to the partners.
  1. Go to Screen 22, Other Special K Items.
  2. Scroll down to the Deductions section.
  3. Open the Other Deductions (Crtl+E) field.
  4. Select W= Other Deductions from the K-1 Code (Ctrl+T) drop down menu.
  5. Enter the type of depreciation adjustment in the Description column, and enter the amount.
  6. Go to Screen 29, Special Allocations.
  7. Click on the Deductions folder to expand it.
  8. Select the Other Deductions folder.
  9. Click on the Other Deductions (Sch. K) folder.
  10. Select the description you entered in step 5.
  11. Allocate the amount to the partners.

This will tell the program to report the amount on Schedule K, line 13, and the partners' Schedule K-1. If you need to generate a Schedule M-1 adjustment, follow these steps:

  1. Go to Screen 27, Schedule M-1.
  2. Scroll down to the Deductions on Schedule K Not Charged Against Book Income section.
  3. Open the Other (Ctrl+E) field.
  4. Enter the type of depreciation adjustment in the Description column, and enter the amount.

Was this helpful?

You must sign in to vote, reply, or post
Lacerte Tax

Sign in for the best experience

Ask questions, get answers, and join our large community of Intuit Accountants users.