Form 1065 Schedule K-1

Forum|Forum|3 years ago
March 20, 2023
2 replies
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I have a very simple Form 1065. Two partners , with a business income of 1,000. Why isn't the profit allocated to both partners as $500 on their respective K-1s on Line 1? Instead program is dividing the gross sales of $2,000 and allocating $1,000 to each party in K-1 Line 14 with a C and nothing on line 1?

LindaS5247

Without access to your return, it's hard to tell what is causing the problem, but if you follow the steps below you can allocate partnership income according to ownership percentage/profit percentage.

You should have entered that you want the income to be allocated by ownership percentage. Your ownership percentages should be reported as 50% each.

Click on the Business Info tab and then click Partner/Member Information.
If you wish to edit any of the partners' personal information or indicate that they left the partnership during the year, click on Edit next to the Partner's Name.
Click Done.
After a few screens you will come to Profit Percentages. Unmark the box, The partner loss or ownership percentages are different from their profit percentages, if it is checked and you want profits solely based on ownership. If it is not marked make sure both partners are properly reported as 50% owners and that profit is to be shared by ownership.
Click Continue.

The income should now be allocated on an ownership basis. Profit percentage basis.

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Mike9241

14c is correct since that's supposed to be an allocation of the gross income. it really doesn't affect the partners 1040's. the problem is the net income is not flowing to line 1 and probably 14a. have you properly entered the partners profit and loss sharing %'s? go through the return and see if there are any boxes in red or pink. those would indicate missing info.