What is the calculation of Maryland Form 511, line 2 in an 1065 return using CCH® ProSystem fx® Tax interview view?

  • Article Type:
  • QA
  • Last Modified:
  • 08/11/2021

Question

Maryland Electing Pass-Through Entity Deduction

Environment

  • CCH® ProSystem fx® Tax
  • CCH Axcess™ Tax
  • 1065
  • Partnership
  • Maryland
  • Interview View 

Answer

Beginning on release 2020.040110 (Axcess 2020-4.11) available August 13, 2021:

State and local taxes based on income (trade/business, rental farm, etc.) will now be included in the calculation of Form 511, line 2.  An override for this calculation is available on Interview Form MD4, Box 85.

Prior to this release:

MD electing PTE instructions, page 5 and 6 discuss how Form 511, line 2 should be derived, specific to Federal 1065 Schedule K, lines 1-11, plus taxes based on income included in 1065 page 1, line 14. Currently, the MD tax Federal deduction addback is calculated when it is derived from the tax payment input on MD4, boxes 50-53 and Federal State/City Tax Accrual is selected to carry to Federal 1065 page 1 and adjust either the balance sheet or Schedule M-1.
  1. Go to Interview Form 2, box 101 and select code 1 or 2.
  2. Go to Interview Form A-3, boxes 60-106, and remove inputs for state code MD.

Notes

  • For Cash Basis taxpayers:
    • If the Federal 1065, page 1, line 14, MD taxes paid deduction is different than the taxes paid including accrued taxes input on MD4, boxes 50-53, then an input may be needed on Interview Form L-3, box 93 to balance the Federal Schedule L.
    • If not choosing to use Form 2 box 101, the documented work around on release 2020.04010 is to pink override MD 511, line 4, and go to MD2, boxes 30 and 32 to input the correct amounts for the Maryland Schedule K-1s, lines A1 and A2..
  • On release 2020.04010, A-3 box 60-106 DO NOT get added back to 511, line 2.
    • The Calculation of MD 511, line 2 does not currently consider this Fed deduction input that is not first used for reducing taxes due on the Form 511, line 12. 
    • This input is expected to be included in the calculation of Form 511, line 2 on release 2020.04020, available August 22, 2021.
  • Preparers have often asked support about the system calculating a MD K-1, line B5 Addition. 
    • When the addback is calculated as included on MD 511, line 2, and Sch. K-1, Part A, line 1 then it is not included as addition on line B5.

Additional Information

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