Form 1065 Schedule K-1 line 20: I can't enter a code Z for a SEC 199A dividend. It's not on the drop down list. This p'shp is just portfolio investments .
IRS instructions definitely call for a code Z. This is just a small REIT dividend on a p'shp that has no income on lines 1-3.
Solution: You cannot pull a Code Z down on the Form 1065 pp.5-6, but no problem. On the 199A worksheet check the box marking the business as active EVEN if lines 1 through 3 of K-1 are zero or the p'shp just generates portfolio income (e.g., a stock portfolio). The broker's 1099 input the SEC199A dividend but you will also need to put it down on the 199A worksheet line 5 as other income. There is no need to type in anything more on line 20 of the Form 1065 schedule K. Turbotax will automatically generate the appropriate material on each individual's K-1. Look at each K-1 for a cross-reference to a Statement A and then check the Statement A for the REIT dividend QBI. Beware of Turbotax generating an unrequested ZZ explanation statement.
