How do I get an amount to show on Form 1065, Schedule K-1, line 21?
Schedule K-1, line 21 displays the amount of Foreign Taxes Paid or Accrued. Details are required to be reported on Schedule K-3 (see Related Links below for more information about Schedules K-2 and K-3). Per the instructions:
"Foreign taxes paid or accrued reduce a partner's basis and are limited to basis. Do not use this amount to complete your Form 1116 or 1118. See Schedule K-3 to complete your Form 1116 or 1118."
In the 1065 return, report foreign transactions on the applicable K2 screen(s). This generates an amount on Schedule K-1, line 21 and produces the pages of Schedule K-3 needed for the partners to report amounts on their individual or business returns (see below for details on each return type).
An override is available on the K screen > Other Information Cont'd. tab > line 21.
Where do I enter information reported on Schedule K-1, line 21 in the partner's 1040, 1120, 1120-S, or 1065 return?
Screen K1P is used to enter the information reported on Schedule K-1 from a partnership, however, there is no entry on the K1P screen for line 21 in any package. For partners that received Schedule K-1 with an amount in box 21, data entry is as follows. Note that the partnership should have also included Schedule K-3 with the details needed to complete the relevant form(s) indicated below.
- 1040 or 1041
- Use Schedule K-3 to complete Form 1116.
- 1120
- Use Schedule K-3 to complete Form 1118.
- 1065 or 1120S
- Use Schedule K-3 to complete the K2 screens of the partnership or S corporation (foreign taxes are entered on the III4 screen). When a pass-through entity receives information from another pass-through entity, the amounts are re-entered and continue to pass-through the information until it gets to an individual partner or shareholder who is allowed to take the credit.