1065-US: Entering information for Schedule K-1, box 13, code T, U, or V (FAQ)

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Question

Where do I enter domestic production activities deduction information for Schedule K-1, box 13, code T, U, or V?

Answer

Per the Form 8903 instructions, the domestic production activities deduction (DPAD) is determined at the partner level; therefore, the partnership calculates and reports on Schedule K-1 the information each partner needs to complete his separate Form 8903. The partnership does not file Form 8903.

If the partnership is an eligible entity as defined in Revenue Procedure 2007-34, section 3.01, the partnership may choose to calculate the qualified production activities income (QPAI) and W-2 wages at the entity level. This information will be reported on Schedule K-1, box 13, codes U and V. An eligible partnership can calculate the QPAI and W-2 wages using the section 861 method, the simplified deduction method, or the small business simplified overall method, where applicable.

In Screen K-3, select 1 in the Method for computing qualified production activities income field and enter amounts in the Domestic production gross receipts (DPGR); Cost of goods sold allocable to DPGR; Deductions, expenses, and losses: Directly allocable to DPGR; Deductions, expenses, and losses: Indirectly allocable to DPGR; and Form W-2 wages fields. The QPAI and Employer's Form W-2 wages are calculated on the Domestic Production Activities Deduction Worksheet. The partners' shares of the amounts are reported on Schedule K-1, box 13, codes U and V.

If the partnership does not calculate QPAI and W-2 wages at the entity level, whether by ineligibility per Revenue Procedure 2007-34 or by choice, then the partnership must provide the information for the partner to calculate the deduction at the partner level. Select 2 in the Method for computing qualified production activities income field in Screen K-3. UltraTax CS reports this information on Schedule K-1, box 13, code T. The following information, as listed in the Form 1065 instructions for Schedule K, line 13d, must be provided for the partner to calculate the domestic production activities deduction.

Related topic: Domestic production activities deductions FAQs (1065)

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