I have a client with a 2023 Schedule K-1 (Form 1120-S) with entries on Line 10 Other Income and Line 12 Other Deductions. Line 10 shows a code of ZZ $24,242.00 and Line 12 shows a code of ZZ $142,842.00. The only shareholders S-Corp are husband and wife and both have a K-1 with the same amounts.
I am amending their Form 1040 for 2023 and want to report the other income and other deductions from their K-1s. The Other Income and Other Deductions come from an investment in a partnership which is set up to manage other companies. Both shareholders are passive investors. The partnership just started in 2023 and did not have any ordinary income or expenses.
The question is: Where to report the Other income and Other Deductions so they are able to take a loss on their investment. The expenses are mostly from management expenses.