I have a client who is a passive member in a partnership, received a K-1 with a loss in 2019 (which didn’t affect tax outcome since the loss gets suspended). The partnership return for 2019 was amended and at the end of 2020, the partner received form 8986 with Partner’s share of Adjustments which increases the loss for the passive member.
From what I read, the partner needs to file form 8978 and 8978a with an increase/decrease to tax liability for the year the adjustment form was received, which we would file for tax year 2020. Since there is no increase/decrease to tax liability, do you agree that I should still attach form 8978 to the tax return and just attach the explanation? There is no way to just input a $0 in UT under Taxes, other taxes, form 8978, line 14.
Do you agree with the course of the action?
Do you have experience with the forms and can suggest something else?