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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120800  
Subject: Schedule K-1 matching Date: 7/10/2002 7:54 PM
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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.

--Peter
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60911 of 120800
Subject: Re: Schedule K-1 matching Date: 7/10/2002 10:16 PM
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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.

I continue to resist this approach, mostly because of stubbornness, aided by the fact that I do very few, mostly vanilla, returns. There are few things in life that irritate me more than having to satisfy a poorly-programmed computer.

Phil

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60919 of 120800
Subject: Re: Schedule K-1 matching Date: 7/12/2002 6:36 PM
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<<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.>>

Thanks for the heads-up, Peter. I don't remember where in the country you practice, but I haven't had that experience here in the Southwest (yet) and I prepare a LOT of returns with Schedule E Partnership information attached.

My tax computer program prints out a summary of each K-1 input and where all of the amounts on the K-1 ended up on the tax return. I've always been amazed that the IRS didn't require a similar form as an attachment to the return (or even as a separate Form) in order to track the various amounts from the K-1 to the tax return. Without some type of "key", it's really difficult for anybody (computer or human) to track complicated (or numerous) K-1 information to the actual tax return.

Oh well...just more billable hours... :-)

TMF Taxes
Roy

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