Form questions about Schedules K-2/K-3

Q: In the 1065 tax software, where is the Organizer for 1065 Schedules K-2 and K-3?
A: The 1065 Schedules K-2 and K-3 Organizer is in the 1- Foreign Information (Ptr Distributive Share- International) and the 2- Partner Information Organizer folders.
Q: Is there an easier way to go to the Ptr Distributive Share-International Organizer folder other than scrolling down the Organizer navigation tree and opening folders?
A: Yes. At the top of the Organizer navigation tree, click Quick Form > Sch K-2/K-3.
Q: I have entered data on the Foreign Information (Ptr Distributive Share-International) Organizer folder but I do not see computations completing and the apply check boxes on Schedules K-2 and K-3 may not be completed. What am I doing wrong?
A: Verify that the Activate Schedules K-2 and K-3 (Mandatory) check box is checked on the K-2, K-3 Activation and General Info Organizer. Then do a full compute.
Q: I have checked the Activate Schedules K-2 and K-3 (Mandatory) check box. I am still not seeing my amounts allocate to Schedule K-3. Why?
A: On the Partner Allocations Organizer (on the navigation tree below the Quick Form Organizer), verify the Enable partner allocations and the Enable Schedule K-3 Partner check boxes are checked. Then fully compute the return.
Q: Where are the partnership and partner name, address, and ID numbers for Schedules K-2 and K-3 entered on the Organizer? How about the fiscal/short year dates?
A: The partnership’s name, address, and ID number, and the fiscal/short year dates are entered on Organizer > General Information > Basic Return Information. Entering short tax year or fiscal year dates will not change computations on Schedules K-2 and K-3. For a 1065 return, the partner’s name, address, and ID number are entered on the Partner Information Organizer. This will be the same Organizer input as prior tax year returns.
Q: Other than activation, do partner allocations function the same and get entered the same for Schedules K-2 and K-3 as for the other items in the 1065 tax software?
A: After activation, partner allocations function the same for Schedules K-2 and K-3. The partner (special) allocations are entered in the same manner for 1065 Schedules K-2 and K-3 as for other items.
Q: Are 1065 federal partner footnotes available for Schedule K-3 and/or Schedule K-1?
A: Yes. The Footnote Organizer screen is located at Footnotes and Invoicing > Partner Footnotes > Without Amounts (Sch K-1, K-3), Foreign Transactions (Sch K-1, K-3). If the footnote is for Schedule K-3, check the applicable box on this Footnote Organizer screen.
Q: Is all the information for Part II by Country?
A: No. Lines that do not have a country-by-country breakout on the Schedules K-2 and K-3 Tax Forms are to be reported NOT by country.
Q: Is there a way to delete all data on the 1065 Schedule K-3 Workpapers and Tax Forms, such as after import?
A: Yes. At the bottom of the Organizer screen at Partner Information > Common Partner Data > Delete ALL Partners is a push button to delete all data on the Schedule K-3, Tax Forms and Workpapers. Note that this push button only deletes data entered directly (including importing) on the Tax Forms and Workpapers for Schedule K-3 and does NOT delete Organizer entries or entries anywhere else in the 1065 software. Thus, on a full (auto) compute, applicable Organizer data will display on Schedule K-3 again. This Organizer push button should not be used unless really needed. Schedule K-2 has no such push button.
Q: I have a higher amount on Schedule K-2 than will be on Schedule K-3 for the same item. How do I handle this in the tax software?
A: If there is not an if-different Organizer field for the item for Schedule K-3, then this can be accomplished by using special allocations and allocating the portion of the amount not to be used on the tax return to a partner whose Schedule K-3 is suppressed.
Q: After entering my data and fully computing, where do I go in the tax software to create e-file for the federal return and Schedules K-2 and K-3?
A: Schedules K-2 and K-3 are federal forms, go to
Organizer > Federal E-file > Create E-file
.
  1. Verify federal e-file is enabled.
  2. After creating the federal e-file, check for any validation diagnostics and other items.
Q: Will the IRS reject Schedules K-2 and K-3 XML e-filing if a Part does not apply on Tax Forms > Schedule K-2 > Page 1> line C and/or Schedule K-3 > Page 1 > line E (answered “No”) but it has detail?
A: If a Part does not apply on Schedule K-2 or on Schedule K-3, that applicable Part for the partnership or for the partner cannot have detail. The tax software will suppress the detail for such a Part. If a Part applies on Schedule K-2 or on Schedule K-3, that applicable Part for the partnership or for the partner must have detail. The same is applicable for the check boxes on Part I of Schedules K-2 and K-3. Returns with the above issue will be rejected by the IRS.
Q: Does the tax software automatically check\uncheck the boxes on Tax Forms >Schedule K-2 > Page 1 > line C and/or Schedule K-3 > Page 1 > line E, and the boxes on Part I?
A: Yes. The tax software will automatically handle these boxes, so do not check/uncheck these boxes manually, especially if XML e-filing Schedules K-2 and K-3.
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