In another thread, we had a very robust discussion on where a proprietary trader should take excess expenses that were not reflected on the K-1 that the proprietary trader received. After much debate, I concurred with several other posters that the correct answer is that such expenses are listed on Schedule E, line 28, column (h) as a separate line entry--not aggregated with the other expenses from the K-1. So if I understand your facts correctly, you have exactly that situation. You have a business expense that was not listed on the K-1 you received. If that is correct, the answer on where to list it is as listed above. A significant and related question though is whether such expenses need to be capitalized as opposed to deducted as a current expense. If these expenses need to be capitalized, you've got a much different situation. Generally, capital expenses must be deducted by means of depreciation or amortization. I don't have time at the moment to research whether the proprietary software development costs are a capital item as opposed to a deductible expense, but some of the other participants on this forum may have looked at that issue.
In my 12/15/03 post, I speculated whether the computer software development costs had to be capitalized, and I noted that I did not have time at that moment to research the issue. Today, in the course of researching something else, I came across what appears to be the answer. The costs of developing software for the taxpayer's own use (or for the sale or lease to others) may be deducted currently or amortized over a five-year period, so long as such costs are treated consistently. The cite to that rule is Rev. proc. 2000-50.