Schedule M-2 Book income off by Guaranteed Payments in a 2020 1065 return using CCH Axcess™ Tax and CCH® ProSystem fx® Tax.

  • Article Type:
  • Problem Resolution
  • Last Modified:
  • 02/10/2021

Symptoms

Schedule M-2 book income off by guaranteed payments.

 

Environment

CCH® ProSystem fx® Tax
CCH Axcess Tax

Cause

N/A

Resolution

The Schedule K, line 4 - Guaranteed payments for services and capital will be automatically included in the calculation of the Schedule K-1, Item L, Current year net income(loss).

The following option is available with release 2020.02040 / 2020-2.4:
  1. Go to Partners > General Options worksheet.
  2. Expand Section 2 - Schedule K-1 Calculation Options.
  3. In Line 30 (Interview Form 5A, Box 94) - Code to include or exclude partners' guaranteed payments for services and capital from Schedule K-1, item L and Schedule M-2, select from the following options:
    • Option 1 - Include all guaranteed payments in current year net income amounts - This is the default option and will include all guaranteed payments in the calculation of the current year net income(loss).
    • Option 2 Exclude all guaranteed payments from Schedule K-1, Item L and Schedule M-2 - No guaranteed payments will be included in the calculation of the current year net income(loss).
    • Option 3 Exclude guaranteed payments for services from Schedule K, Item L and Schedule M-2 – The guaranteed payments for services will be excluded from the calculation of the current year net income (loss).
    • Option 4 Exclude guaranteed payments for capital from Schedule K, Item L and Schedule M-2 - The guaranteed payments for capital will be excluded from current year net income (loss).
  4. Calculate the return.
Options above can be set as a system default for all returns assigned to an CCH® ProSystem fx® Tax Return Group and CCH Axcess™ Tax Return Configuration Set:
  1. ProSystem fx® Office Manager > Configure Applications CCH Axcess™ Dashboard > Application Links Return Configuration Sets.
  2. Select the relevant Office Group Return Configuration Set.
  3. Select Miscellaneous Options.
  4. In Field Reserved for future use 1, input applicable of Options 1-4 listed above.
  5. Select OK Save and Close, to save this change.
  6. The option code will be the default selected the next time a return assigned to the Return Group / Return Configuration Set is opened and calculated.

Additional Information

N/A

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