Some items reported on your Schedule K-1 (Form 1065) may need to be entered directly into a specific form instead of the K-1 entry screen within the program. Below is a list of items that are not entered directly into Form 1065, Schedule K-1 within the program. Please find the specific item within Box 18 that is reported on your Form 1065.
Code B - Other tax-exempt income
Amounts reported as Code B will increase your basis of interest in the partnership. However, this amount will not be included as income on your tax return. You can find additional information about how to adjust your basis on the attached statement from the partnership. Included in this information is a description of the income as well as any exemption reasons under section 892.
Code C - Nondeductible expenses
Amounts reported as Code C are not considered deductible as these are expenses paid or incurred by the partnership. You will use this amount to adjust your basis of interest in the partnership.
Source: IRS Form 1065, Schedule K-1 Partnership Instructions