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Subject:  Schedule K-1 matching Date:  7/10/2002  7:54 PM
Author:  ptheland Number:  60910 of 127616

Well, I've just received my 3rd CP-2000 notice sent to a client in less than a week. It seems that the IRS is now matching K-1 information to what is reported on Schedule E. I use the term "matching" a bit loosely here, as they seem to be a bit choosy about what they match up.

For example, they picked up the business income from a trust K-1, but ignored the depreciation pass-thru on the next line.

They also seem to have some problems with section 754 depreciation for partnerships.

So it seems that it's time to dredge up all those old tricks we learned when the interest and dividend matching started. Things like showing exactly what's on the K-1, then showing adjustments on another line.

These returns were all for the 2000 year. And none of them involved passive activity losses - they were either actively involved, or were passive activities with gains. I have no idea what they're doing with PAL's yet.

Just thought some folks would like to know what their tax dollars are doing.

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