Entity Return

Schedule K-1, line 21 displays the amount of Foreign Taxes Paid or Accrued. Details about international partner distributive share items are reported on Schedules K-2 (filed with Form 1065) and K-3 (furnished to each partner). See Drake Tax - 1065 - Schedules K-2 and K-3 for more information about Schedules K-2 and K-3.

Partner Returns

Screen K1P is used to enter the information reported on Schedule K-1 from a partnership, however, there is no entry on the K1P screen for line 21 in any return type. Per the 1065 Schedule K-1 Instructions:

"Foreign taxes paid or accrued reduce a partner's basis and are limited to basis. Do not use this amount to complete your Form 1116 or 1118. See Schedule K-3 to complete your Form 1116 or 1118."

For partners that received Schedule K-1 with an amount in box 21, data entry is as follows.

1040 or 1041

Use Schedule K-3 to complete Form 1116 and calculate any available foreign tax credit. See Drake Tax – 1116: Frequently Asked Questions for details on data entry.

1120

Use Schedule K-3 to complete Form 1118 and calculate any available foreign tax credit. See Drake Tax - 1120 - Form 1118 for details on how to complete Form 1118 in an 1120 return.

1065 or 1120-S

Pass-through entities that receive information from other pass-through entities cannot use the information to claim any tax credit; the data from the pass-through entity must be re-entered and continue to pass-through until it gets to an individual partner or shareholder who is allowed to take the credit. Use Schedule K-3 to complete the K2 screens of the partnership or S corporation. (Foreign taxes are entered on the III4 screen.).