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Yes, you can put the foreign taxes from the K-1 on the sch A instead. However, if you still want to use the 1116, you don't have to break out between passive and general income categories if this client is a limited partner with less than 10% in the ptnship and does not activity participate. That is stated in the form 1116 instructions starting at the very bottom left of page 5 of the instructions. In this instance, the form's instructions references the reg sec 1.904-5(h)(2) where this is stated. As a matter of fact, I think that this same rule should also allow you to bypass the 1116 altogether and enter directly on the 1040 since it is only $61. The rule for reporting directly on the 1040 is if it's under the dollar thresholds, is all in the passive category, and is reported on a 1099DIV, 1099INT, or a K-1. It seems like it meets all the criteria to me.

Well, yes. But what I frequently do is make a note of what needs investigation, to be done in a non-time-crunched period. To get to that spot, though, sometimes I just need something that *works* for when I know what the result should be and just can't get it there.

OP didn't mention if her client has other foreign taxes paid. My clients with a K-1 often have more K-1s plus lots of other investments with total foreign taxes running more like $800 and requiring the full Form 1116. Or, are children with no tax liability so we want the 1116 carry forward to use in a later year. Or, had foreign earned income in the mix. There are options with foreign taxes and foreign income, just like with education credits/adjustments/deductions. Knowing how to input in your software for ALL the options makes it easier to calculate the best option for a given client in a given year, while you save time by putting your software to work for you. (That's why this is a great forum with users of different software to chime in!)

back at ya. Works well for me. So there!

Never mind.....

Yep. Especially when the K1 got here yesterday and the client needs the tax return for a refi the day before that. Thanks everyone for saving me a lot of time

I am a Drake user as well. Put it on a dividend screen and check the box that says no 1116 is required. Make sure you put foreign income in the div/qualdiv boxes up top or it won't flow through.

The thing is about bypassing the 1116 altogether and putting it all on the 1040 directly, we are still supposed to calculate the FTC with any limitations that might apply that would reduce it. Does anyone actually do that? Rhetorical, don't answer. For $61, I'd force the flow of it to page 2 of the 1040 and move on.

No need to call Drake. It happens when there are foreign amounts on a 1099-INT. It should be entered on the 1099-DIV screen and it won't be a problem since the worksheets aren't transmitted to the IRS. Just don't print the worksheet for the client if it will be questioned why it is on a DIV worksheet.

Those little booklets written in tiny print that come with the PTP K-1s come in handy sometimes, eh? If I find one with diagrams and readable print, I always put it aside to use with all my clients who have these darned investments. Lucky you get to do two 1116s because you have both passive and general category income.

Drake sounds lame.

Abby,. I'm a Drake user. There are no input boxes for 16 on a K1. Jklcpa, this does meet that criteria and I'll take another look at 1116 instructions with a little more confidence. Thanks!

The 1116 is really automatic. You just need to learn what boxes have to be entered on the K1 input. BUT if you have less than $300 single/$600 married in foreign tax, you can delete the 1116 and the tax will automatically show up on the 1040. Boom!