TaxAlmanac:Featured article/July 11, 2005

From TaxAlmanac

Schedule K-1 - Line 20 (Form 1065) Code Definition

For 2004, schedule K-1 (1065) has been redesigned. Each amount on schedule K-1 now has a code next to it, with a list of codes being attached to the prepared K-1. The information below is from the schedule K-1 partners instructions that should be distributed to each partner.

Line 20 - Other Information

Code A - Investment Income = Report on line 4a of form (Form 4952) "Investment Interest Expense Deduction"

Code B - Investment Expenses = Report on line 5 of form (Form 4952) "Investment Interest Expense Deduction"

Code C - Fuel Tax Credit Information = Partnership will report the number of gallons sold of each fuel type sold or used during the tax year for a nontaxable use qualifying for the credit for taxes paid on fuel. Use this information to complete (Form 4136) "Credit for federal tax paid on fuels".

Code D - Look back interest - Completed long term contracts = The partnership will include any information you need to figure the interest due or to be refunded under the look-back method of section 460(b)(2) on certain long-term contracts. Use form (Form 8697) and (instructions), "Interest computation under the look-back method for completed long-term contracts", to report any such interest.

Code E - Income forecast method - Completed long term contracts = The partnership will include any information you need to figure the interest due or to be refunded under the look-back method of section 167(g)(2) on certain property placed in service after September 13, 1995 and depreciated under the income forecast method.Use form (Form 8866) and (instructions), "Interest computation under the look-back method for property depreciated under the forecast method", to report any such interest.