What to do if Schedule K-1 Box 1 shows loss and Box 2 shows income?

The preparer of your K-1 may have reported more than one activity on one Schedule K-1.

Hopefully, the preparer of the K-1 has provided an attachment outlining the breakdown of incomes, expenses and attributes that are listed on the K-1.  The original K-1 and the attachment provided by the preparer of the K-1 may look like this.

Original K-1                                                         Box 1 only                                                           Box 2 only

Box 1     $1,000                   =                             $1,000

Box 2     $500                      =                                                                                                            $500

Box 5     $100                      =                             $75                                                                         $25

Box 6a   $200                      =                             $150                                                                       $50

Box 6b   $100                      =                             $75                                                                         $25

W-2 wages $50,000            =                            $25,000                                                                 $25,000

UBIA $100,000                    =                             $50,000                                                                 $50,000

The partnership should provide section 199A information to compute the qualifying business income deduction for the entity as well as the individual box 1 and box 2 incomes.

At the screen Choose Type of Activity, click This K-1 reports in more than one of boxes 1,2, and 3.

Since your K-1 reports amounts in more than one of boxes 1, 2, or 3, the partnership/LLC is involved in more than one type of activity.  You should treat each activity separately in TurboTax.

So there will be one K-1 entry for box 1 income.  Only click on box 1 and the statement "This K-1...".

There will be a second K-1 entry for box 2 income.  Only click on box 2 and the statement "This K-1...".

The other boxes of the K-1 may refer to either box 1 income, box 2 income or a combination.  The preparer of the K-1 may have included attachments or detail which explain how those items break down.