To report partnership Schedule K-1, box 13J expenses for an individual return, follow these steps:
- Go to Screen 20, Passthrough K-1's.
- Select Partnership Information from the top left menu.
- Select the Line 13 - Other Deductions section from the lower left sections menu.
- Locate the (J) Section 59(e)(2) Expenses subsection.
- Select the Type of expenses (Ctrl+T) from the dropdown menu.
- Enter the (13J) Amount reported on Schedule K-1.
- Enter any Dry hole expense. (if applicable).
The partnership should have included the type and amount of Section 59(e)(2) expense on a statement attached to the K-1. Enter the type of expense indicated on that statement.
If these expenses are deducted in full in the current year, they're treated as an adjustment or tax preference item for the Alternative Minimum Tax. Generally, section 59(e)(2) lets the partner amortize the expense for a number of years to avoid the Alternative Minimum Tax adjustment.
Only enter expenses you want to deduct in full in the K-1 input screen. To amortize the amount, enter the expense on Screen 22, Depreciation and tie the asset to the pass-through entity.