If you have an amount in Box 13, Code J of your Partnership Schedule K-1 for Sec 59(e)(2) expenditures, the information will be reported on Schedule E, Page 2. You can deduct these expenditures in full or you can elect to amortize them.

Per IRS Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only), on page 11:

Box 13. Other Deductions

Code J. Section 59(e)(2) expenditures. On an attached statement, the partnership will show the type and the amount of qualified expenditures for which you may make a section 59(e) election. The statement will also identify the property for which the expenditures were paid or incurred. If there is more than one type of expenditure, the amount of each type will also be listed.

If you deduct these expenditures in full in the current year, they are treated as adjustments or tax preference items for purposes of alternative minimum tax. However, you may elect to amortize these expenditures over the number of years in the applicable period rather than deducting the full amount in the current year. If you make this election, these items are not treated as adjustments or tax preference items.

Under the election, you can deduct circulation expenditures ratably over a 3-year period. Research and experimental expenditures and mining exploration and development costs can be amortized over a 10-year period. Intangible drilling and development costs can be amortized over a 60-month period. The amortization period begins with the month in which such costs were paid or incurred.

Make the election on Form 4562. If you make the election, report the current year amortization of section 59(e) expenditures from Part VI of Form 4562 on line 28 of Schedule E (Form 1040). If you do not make the election, report the section 59(e)(2) expenditures on line 28 of Schedule E (Form 1040) and figure the resulting adjustment or tax preference item (see Form 6251, Alternative Minimum Tax—Individuals). Whether you deduct the expenditures or elect to amortize them, report the amount on a separate line in column (i) of line 28 if you materially participated in the partnership activity. If you didn't materially participate, follow the Instructions for Form 8582 to figure how much of the deduction can be reported in column (g).

To enter the information in the TaxAct^® program (regardless of whether you choose to deduct the expenditures in full in the current year or amortize over a longer period):

1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
2. Click the Business Income dropdown, then click Partnership income (Form 1065 Schedule K-1).
3. Click + Add Partnership Schedule K-1 to create a new copy of the form or click Edit to review a form already created (desktop program: click Review instead of Edit).
4. Continue with the interview process until you reach the screen titled Partnership - Schedule K-1 Information, then click the Checkbox next to Box 13 - Other deductions.
5. On the screen titled Partnership - Other Deductions, click Yes.
6. On the screen titled Partnership - Other Deductions - Section 59(e)(2) Expenditures, click Yes.
7. Click + Add Form 4562 Amortization to create a new copy of the form or click Edit to review a form already created (desktop program: click Review instead of Edit).
8. On the screen titled Amortization - Section 59(e)(2), enter the required information (if you want to elect to amortize this expenditure, click the Checkbox next to Elect to amortize that appears after you choose a type, and enter the additional information.

When choosing to deduct the expenditures, you will also need to figure the resulting adjustment or tax preference item on Form 6251 Alternative Minimum Tax. Go to our Form 6251 - Alternative Minimum Tax - AMT FAQ for instructions.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.