Efile prevented

[Randall]

Client has SE tax from 1065 K1 income and Sec 179 deduction. ATX is saying efile can't be done because of the Bus Inc Statment for line 2 on SE Sch. ATX message says I need to paper file. Has anyone else encountered this?

[Lion EA]

Can't point to a client this year. But, I know my clients that have K-1s have had Sec 179 and I e-file most of my clients. Any other diagnostics to give a better explanation of why you must paper file?

[RJM]

Yes, this happened to a client during April. I assumed either there was a bug in the ATX software (did not call texupport), or there was some special new IRS rule. I remember the reject said it was from the IRS, and that I was forced to paper-file. Never researched this, so am interested in any knowledgeable responses to the OP. -Bob

[Randall]

If I net the S179 amount against the income amount on the line for SE earnings on the K1 input sheet, Sch E, page 2 continues to flow correctly, and the net amount carries to the SE schedule. However, I then have to override the S179 deduction on the separate line of the Sch SE Bus Income worksheet or there will be a double deduction for SE purposes. Doing this allows the efile to be created with no error messages.

Anyone see any problem with this? The original efile rejection message warned that the IRS could adjust the tax amount due/refund and said to paper file the return. But if Sch E shows income, S179 amounts, and the SE schedule shows a net of these amounts, would IRS automatically recalculate for any reason?

[barosser]

I had 4 and the end of April with same problem, I just paper filed, Pain in the rear

[kcjenkins]

I had a couple of these, it was a pain, but hey, the IRS often makes us do things for THEIR convenience, and I guess it was easier for them to make us paper file than it was to fix the problem at their end.