Corrections Log

Box 18B and Box 18C were not accepted as inputs in the K-1 Basis Tracker

Fix shipped September 9, 2026 · Logged September 9, 2026

From May 11, 2026 until September 9, 2026, the K-1 Basis Tracker’s computation engine supported Box 18B (other tax-exempt income, worksheet Line 4m) and Box 18C (nondeductible expenses, worksheet Line 12), but no entry path — the Edit K-1 form, the PDF upload, or the CSV import — could populate either box. Every stored year therefore computed with both at zero. Before May 11, 2026 the engine had no Line 12 step at all, so the Box 18C omission extends back to the tool’s launch.

Effect per year, per K-1:

• Box 18C omitted → ending basis OVERSTATED by the Box 18C amount (IRC §705(a)(2)(B) reduces basis for nondeductible, non-capital expenditures). The overstatement carries into every later year’s beginning basis. At sale, an overstated basis understates taxable gain. Nearly every MLP K-1 reports a small Box 18C amount, typically single or low double digits per year.
• Box 18B omitted → ending basis UNDERSTATED by the Box 18B amount (IRC §705(a)(1)(B) increases basis for tax-exempt income). Box 18B is rare on midstream MLP K-1s.

Who is affected: every user with stored K-1 years whose K-1s show a nonzero Box 18C (most) or Box 18B (few). Known live case: one customer’s ET 2020 K-1, Box 18C = 14 in the ET activity column — basis overstated by 14 for 2020 and each year after, until the value is entered.

What you need to do — this does NOT correct itself. The tool cannot recover a number it never stored. For each stored year, open Edit K-1 (detailed mode), enter Box 18B and Box 18C from that year’s K-1, and save; later years recompute from the corrected year automatically. Re-uploading the K-1 PDF also captures both boxes now. If you exported a CPA report or sale estimate before entering these values, regenerate it afterward.

Box 20N (business interest expense) in the K-1 Basis Tracker’s basis worksheet

Fix shipped September 4, 2026 · Logged September 5, 2026

The K-1 Basis Tracker mishandled Box 20N (business interest expense) in two distinct windows:

• Before May 11, 2026: the engine added Box 20N back on worksheet Line 4n but had no Line 15q deduction at all. In years with positive Box 1+2+3 income, ending basis was overstated by the added-back amount. An overstated basis understates taxable gain at sale — if you sold in this window and your K-1s carried Box 20N, your reported gain may have been too low; review with your CPA.
• May 11 – September 4, 2026: the rebuilt engine deducted the full Box 20N on Line 15q while capping the Line 4n addback at positive Box 1+2+3 income. In any year where Box 20N exceeded that positive income — loss years, which are typical for midstream MLPs — ending basis was understated by the difference, up to the full Box 20N per year. An understated basis overstates taxable gain at sale and can suspend losses too early. Years where Box 20N ≤ positive Box 1+2+3 were unaffected in this window (the addback and deduction cancelled).

The engine now carries the same capped amount on both lines: Box 20N on its own does not change ending basis. This matches the IRS treatment — per the TY2025 Partner’s Instructions, Code N: “Deductible BIE is reported elsewhere on Schedule K-1 and the total amount is reported here for information only and was already included as a deduction on another line of your Schedule K-1.” (The IRS worksheet enters the full 20N on Line 15q while excluding BIE from the loss lines 15a–15c; the tool computes the identical ending basis by carrying the Line 4n capped amount on both lines.) Business interest expense reduces basis as an undeducted item only when the partnership allocates it as excess business interest expense, Box 13 code K. See the corrected walkthrough in the K-1 Basis Worksheet Explained.

Who is affected: any user whose K-1 entries carry a nonzero Box 20N — overstated basis before May 11, 2026 (income years); understated basis from May 11 until the fix shipped (years where 20N exceeded positive Box 1+2+3, checked per year and per lot share).

This corrects itself on your next visit. Every stored worksheet is stamped with the engine version that computed it; on load, records computed under superseded math are recomputed from your stored K-1 entries — no re-entry needed. If you exported a CPA report or sale estimate from an affected year before September 4, 2026, regenerate it after your next sign-in.