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The K-1 does not include a section 20AH. It does include a section "IRC Sec. 163(J) adjusted taxable income calculation" which includes:
Taxable income
Business Interest Expense Not from a Pass-through
Depreciation, Amortization and Depletion Deduction
Pass-through Loss and Deduction Items (Box 13(V))

The total of these 4 items is labeled "Adjusted Taxable Income" but this number is NOT the same as the "Ordinary business income (loss)" in Box 1. It is not shown anywhere on Page 1 of the K-1.

I'm puzzled since I would expect that "Adjusted Taxable Income" would have to be reported but, if so, I don't know how so I didn't report it.

The K-1 contains an Item L - Reconciliation which does not show the number in Box 13(V).

Please help me phrase a question to the tax preparer.
Bottom line: Could any of the Pass-through Loss and Deduction Items potentially be added to 1040X or would none of them qualify in any case?

=======================================
The "Adjusted Taxable Income" number shown is NOT an additional income amount to simply add to your Schedule E. It is the taxable income -SPECIFICALLY FOR THE PURPOSE OF SECTION 163(J)- to determine if there is a limitation on the business interest that can be deducted. Sometimes that number COULD be the same as the ordinary business income, but more likely not, as a number of adjustments are potentially applicable. In this case the subtotal of incomes listed should probably include the 1231 gain.

An additional question I have - did your tax software produce a Form 8990 for your amended return? Very possibly not. And it may not have if you didn't enter the numbers that total to the Adjusted Taxable Income number. But my suspicion is that possibly that number will go nowhere. Or it may give you an additional interest number, to go to Schedule E, via Form 8990.

A business is not subject to this limitation if its average gross receipts for the prior 3 years is less than $26 million. I'm guessing your motel business isn't that large. But the LLC still has to report the information to you, as the limitation is applied at the owner level.

So you need to ask the preparer:
if the business even had any deductible interest expense;
if it would have been subject to any limitation on its own;
if any applicable interest has been deducted in the "net business income/loss"
if these numbers will require you to have a Form 8990 on your return;

and hopefully this will prompt the preparer to give you a more complete explanation of the situation.

Not knowing all the details of the business I can't come up with every possible applicable question. But these points should help him/her realize what you're trying to understand, and generate a more complete and relevant response.

To clarify: I've never done a return with this 163(j) limit. I retired 5 years ago, and this set of rules came in with the 2017 tax cut act. But I have tried to keep up with current developments, through continuing education to keep my CPA license active.

Bill
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