Can't e-file because of unreimbursed partnership exps?

[David]

I just tried to set up an individual tax return for e-filing but the ATX program would not allow me to e-file. The message says that I have to paper file because line 2 of the SE form includes unreimbursed partnership expenses.

I was able to e-file the return last year. There is no difference between the way I handled things in this year's tax return.

Has anyone else had this problem? What needs to be done to allow this return to be e-filed?

Thanks.

[Maribeth]

I just tried to set up an individual tax return for e-filing but the ATX program would not allow me to e-file. The message says that I have to paper file because line 2 of the SE form includes unreimbursed partnership expenses.

I was able to e-file the return last year. There is no difference between the way I handled things in this year's tax return.

Has anyone else had this problem? What needs to be done to allow this return to be e-filed?

Thanks.

David, did you set up the UPE as a separate partnership on the K-1 input forms?

Maribeth

[taxit]

I've had the same problem. I have not found a work around yet.

[David]

No, I entered it as UPE on line 20 W of the K-1. If this isn't where it should be entered, why is that line there?

So if I set up it up as another partnership and enter the $ on line 20 W won't I get the same error? The error said that if there are UPE then I have to paper file. This will still show as UPE.

Thanks,

David

David, did you set up the UPE as a separate partnership on the K-1 input forms?

Maribeth

[David]

BTW, I handled the UPE the same way as I did on the 2006 tax return. I had no problem e-filing the 2006 tax return by entering the UPE on the UPE line of the K-1. I did not have to set up a separate partnership.

Did something change in 2007?

Thanks,

David

David, did you set up the UPE as a separate partnership on the K-1 input forms?

Maribeth

[Chrisbry]

David,

I posted this on another thread about UPE's:

There is a bug in the program with the UPE. Not that ATX has found it nor do I have time to spend an hour trying to tell them where the error is.

The error message has to do with the UPE carrying to the SE Tax worksheet. The UPE I have is NOT for SE Income -- Rental Real Estate (Passive Income). Therefore, the program was incorrectly calculating the SE tax and deducting these expenses from his Schedule C income.

I deleted the amount from the SE worksheet and it created the efile just fine.

A work around if the UPE's are for nonpassive income -- net it out on the SE Worksheet and eliminate the Line 5 entry. And make sure you S/E tax is calculating correctly.

[David]

Thanks for your help on this.

Unless I am not completely understanding your comment, I think I did what you suggested.

On the Line 2 SE worksheet I entered the self-employment income from the K-1 on line 2. Line 4 of the worksheet says "Less from K-1 input Worksheet (1065) - Unreimbursed partnership expenses" and this is the line I entered the UPE. There is nothing entered on line 5.

This is exactly the same way I handled UPE in the 2006 tax return and I was able to e-file with no problem. I'm not sure why this would change in 2007- if it wasn't broke why did ATX "fix" it?

Did I misunderstand your reply or is the way I explained what I did, the same as your recommendation?

Thanks.

David

David,

I posted this on another thread about UPE's:

A work around if the UPE's are for nonpassive income -- net it out on the SE Worksheet and eliminate the Line 5 entry. And make sure you S/E tax is calculating correctly.

[David]

Maribeth,

OK, I set the UPE up as a separate partnership and used the same partnership name and number but entered the UPE on line 20 W. I still get the same error message and can't set the return up for e-filing.

David

BTW, I handled the UPE the same way as I did on the 2006 tax return. I had no problem e-filing the 2006 tax return by entering the UPE on the UPE line of the K-1. I did not have to set up a separate partnership.

Did something change in 2007?

Thanks,

David

[mcb39]

On the K-1 Input Worksheet, you set up a second partnership called Unreimbursed Expenses. Use the same ID # as Partnership #1. On Line 1; put in the unreimbused expenses as a Negative number. Then go to line 14A nonfarm income and put the same number on that line for Partnership #2; again as a negative number. This will carry it to the Schedule E page 2 and will enter it on line B as a nonpassive loss and will subtract it from the Partnership 1 Income or Add it to the loss. You don't enter it anywhere on the SE. I have been doing it this way for years and have already had several accepted e-files this year. I repeat; it does not go to the SE, it goes to page 2 of the Schedule E.

[taxit]

My office called ATX on this issue today. ATX said it was an IRS rule that if there was an adjustment to the form SE including Sec 179, the return needs to be paper filed. We then called the IRS E-file help desk and the fellow took our name & number and said he would research & call us back. He called back within 45 min. and said the returns should be able to be e-filed. So someone at ATX or CCH is confused and creating another problem we need to work around. It looks like these will need to be paper filed unless ATX fixes the program.

[David]

It worked!

Thanks for your help.

On the K-1 Input Worksheet, you set up a second partnership called Unreimbursed Expenses. Use the same ID # as Partnership #1. On Line 1; put in the unreimbused expenses as a Negative number. Then go to line 14A nonfarm income and put the same number on that line for Partnership #2; again as a negative number. This will carry it to the Schedule E page 2 and will enter it on line B as a nonpassive loss and will subtract it from the Partnership 1 Income or Add it to the loss. You don't enter it anywhere on the SE. I have been doing it this way for years and have already had several accepted e-files this year. I repeat; it does not go to the SE, it goes to page 2 of the Schedule E.

[ajuroff]

I'm glad I found this. I was JUST having this problem and came on the board to search if anyone else had this problem, and - here ya go.

But I still have a question - what about Section 179 expense deduction? Do you put that under the "unreimbursed expenses" partnership on line 12 and also include that amount (as a negative) with the amount on line 1 of the "unreimbursed expenses" partnership? This would carry it to Sch. E page 2 and enter it on line B{i} ,along with the UPE {h} and subtract it from Partnership #1 income.

Is this correct?

[mcb39]

I'm glad I found this. I was JUST having this problem and came on the board to search if anyone else had this problem, and - here ya go.

But I still have a question - what about Section 179 expense deduction? Do you put that under the "unreimbursed expenses" partnership on line 12 and also include that amount (as a negative) with the amount on line 1 of the "unreimbursed expenses" partnership? This would carry it to Sch. E page 2 and enter it on line B{i} ,along with the UPE {h} and subtract it from Partnership #1 income.

Is this correct?

NO....179 expenses flow from Line 12 of Sch K to line 12 of K-1 to Section (i) on page 2 of Schedule E and are subtracted from Income or added to loss without any further help from you.....It should end up on Line A (i)......

[ajuroff]

I just posted that it wasn't working but THEN I found out what I was doing wrong. Geez....I get irritated with myself when I do things like that. haha

Thanks for your help! Much appreciated!