In this course, John Alfonsi reviewed the recent changes made to Schedule K-1 (Form 1065), and guiding practitioners to report individual line items on individual income tax returns.
Although practitioners have grasped many of the changes to Schedule K-1 (Form 1065) resulting from the recent tax reform, the IRS continues to make significant changes to this schedule. Negative tax basis capital reporting is now required, built-in gains and losses are included, and Section 743(b) basis adjustment amounts have been added to the K-1. These are only three of the multiple changes made recently to this schedule.
Even in the past, correctly reporting K-1 activity was challenging. To some degree, the changes are welcome, providing tax professionals with information that some felt was necessary and lacking. Accurately reporting the information from a K-1 is critical to correctly calculating a taxpayer’s taxable income, carryforwards, and basis. Each of the lines and respective amounts represents a separate reporting obligation. Line 20, Other Information, can be particularly troubling and now includes 23 reporting options from A to AH.
John Alfonsi reviews the changes made to Schedule K-1 for flow-through entities due to tax reform and the latest changes made to the schedule, explaining the significance of each box and where and how to report each on the taxpayer’s Form 1040.
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