Lacerte bust - Sch E p 2
Client has an enormous stack of those worthless investment partnership K-1s - the ones where all the boxes have "SEE STMT" and then you have 10 pages of dollar amounts with inscrutable notes about where to put what.
Among those are "Other Portfolio Income," "Other Trade or Business Expenses," and "Other Ordinary Loss." As best as I can tell, all those things end up on Sch E p 2; my preference is to have them separately stated there, because when you net expense items against Box 1 (where the second two arguably could go), you get a CP-2000 for not reporting all your K-1 income.
If you have a simple K-1, and multiple items of income and loss in the "Other nonpassive items" Ctrl+E box, the Sch E p 2 looks right: all the descriptions show up with the right amounts. When you have lots of complex K-1s, Lacerte breaks down somewhere, and the income items are netted against the loss items, so you have the descriptions of the income items but no amounts, and the amounts with the loss items are smaller than they should be, and you have positions that aren't adequately disclosed.
After an hour with tech support, they were unable to fix it. The suggestions they came up with were:
- Just net them with Box 1. (doesn't work because of CP-2000)
- Call up the K-1 issuer and tell them they were producing deficient K-1s. (These are all Big 4 prepared K-1s, so while I may have a good argument as to their deficiency, it's not like my complaint would get them to amend K-1s that are done arguably right.)
- "I can submit it as a bug, but it won't be fixed."
I told the woman that that last bit was BS - that it could be fixed if there were enough push behind it, because I've seen fixes go out in a lot less than the 6 weeks we have left. But she was obviously not a pusher, and the trainer who had been trying to help her had already determined that it was either me or Deloitte doing it wrong, not Lacerte.
So if you've got that situation, watch out, because your returns may be wrong.