When a single schedule K-1 shows multiple sources of income (in Boxes 1, 2 & 3), should ordinary gain in the Schedule K-1 be entered more than once into Turbotax?

Forum|Forum|6 years ago
June 7, 2019
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If more than one box of the boxes 1, 2 and 3 of Part III (Partner's Share of Current Year Income, Deductions, Credits and Other Income) of a single Schedule K-1 have nonzero values in them, then Turbotax says you need to input data into Turbotax as if you have a separate K-1 for each box with a nonzero value. So, for example, if boxes 1 and 2 have nonzero values in them, then you have to input data into Turbotax as if you have two separate schedule K-1s.

The K-1 that I received is for a Publicly Traded Partnership whose main business is not in Real Estate. I have thousands of dollars of loss in Box 1 (Ordinary Business Income), but less than 20 dollars income in Box 2 (Net Real Estate Income). So I inputted the data into Turbotax as if I have two separate K-1s. But this essentially resulted in a doubling of the Ordinary Gain on Line 14 of Form 1040 (and Line 10 of Form 4797) compared to the Ordinary Gain that is shown on the K-1 I have. This seems like it must be incorrect.

But given the fact that Turbotax says you have to enter data as if you have a separate K-1 for each box with a nonzero value, I'm not sure what to do. Should I be inputting less data into the second K-1 section of Turbotax?

TurboTax Deluxe Windows

Best answer by Rick19744

When entering the K-1 information, you do need to set up two separate K-1's for the input.

However, you don't enter the information twice.

On one K-1 input, you would enter all the information on the K-1 EXCEPT box 2.

On the second K-1 input, you would enter ONLY the box 2 information.

Rick19744Answer

Employee

When entering the K-1 information, you do need to set up two separate K-1's for the input.

However, you don't enter the information twice.

On one K-1 input, you would enter all the information on the K-1 EXCEPT box 2.

On the second K-1 input, you would enter ONLY the box 2 information.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

WiseIconoclastAuthor

Employee

Thank you RIck. If the magnitude of money recorded in Boxes 2 and 3 (typically less than 5 or 10 dollars) is much less than the magnitude of money recorded in Box 1 (typically a loss of thousands of dollars) for each of three consecutive K-1s (in 2015, 2016 and 2017). Do you (or others) think that the entry (or non entry) of these smaller amounts for Boxes 2 and 3 into Turbotax will have a significant impact on my tax bill?

Thanks again,

W.I.

rodderrs

if have entries in box 1 and box 2, TT suggests creating two entries, where one version is just Box 2 and 13, and the other is Box 1 and all other boxes. This leaves unexplained what to do with entries in box 20z where one of the items is often rental income. (note that rental income goes in box 2 also). So it seems illogical to have a separate version of the k1 in TT for Box 2 rental income and then have box 20 reported on the OTHER version of the k1 in TT. Would seem more logical to instruct one version of k1 entries for Box 2 and Box 20. THIS WHOLE COMPLICATION IS CREATED BECAUSE TT CANNOT HANDLE A k1 that has entries in box 1 and box 2. Can't TT just fix that bug?

AmyC

Employee

@rodderrs You can enter the k1 box 20 entries on either form. The program has been this way for years and only the programmers know why. The key here is that the information is only entered once between the two forms. It does not matter so much which form other than the box 1 and box 2 must be separate. The program picks up the information and moves it around and makes it all work together.

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spaceman-spiff

@AmyC thanks that is helpful to know.

Say I have a K-1 with Box 1 and Box 2 entries.

Two follow up questions:

Should I mark the two different K-1's I enter into TT as an aggregated business? It is really the exact same business, not two separate businesses, so my guess is "no". But then TT must internally aggregate them somehow.
On the K-1 I create with only the Box 2 entry, what do I do about entering the partner's share of profit / liabilities and the capital account? There is a note saying that the Ending Nonrecourse liability is mandatory, so do I have to enter that for both K-1's? Or can I leave everything blank on the Box 2 K-1?