Entering reported tax information for Schedule K-1 (Form 1120S)

[kr-2700]

I received Schedule K-1 form 1120S from the S-Corp;  it shows figures in Box 1 (Ordinary Business Income/Loss) and Box 2 (Net Rental Real Estate Income/Loss).  Turbo Tax forces the creation of two K-1 entries in Wages & Earnings to account for this as "two separate businesses".  The S-Corp's Schedule K-1 also shows figures for Interest Income, Ordinary Dividends, Royalties, etc.  However, there is no indication to which of the two K-1 entries in Turbo Tax each number should be entered.  For example, should Interest Income be entered into the K-1 for Ordinary Business, or K-1 for Rental Real Estate).  Has anyone experienced this and solved it?  

[LudwigVan_fan]

Up front I'll tell you I'm not familiar enough with TT itself to know what boxes, areas of TT to enter things.  But, I can explain what is on the K-1 and perhaps that will help you.

Items reported on Sch K-1 are passed through from the S Corp and must be segregated into various items on the 1040 for different tax treatment.  Box 1, ordinary income/loss is what it says.

Net rental income/loss is a separately stated item, and would be grouped with any other rental income/loss that you may have on your return, and the losses would be subject to passive activity rules.

Interest Income, Dividends, are investment income and would be grouped with other investment income as the same type.  

Here is a link to the instructions for Shareholders of an S Corp.  Again, I'm sorry, but I'm not familiar enough with the nuts and bolts of TT to give advice or instruction on how to actually enter it into TT.

chrome-extension://oemmndcbldboiebfnladdacbdfmadadm/https://www.irs.gov/pub/irs-pdf/i1120ssk.pdf

[tagteam]

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@kr-2700 wrote:

For example, should Interest Income be entered into the K-1 for Ordinary Business, or K-1 for Rental Real Estate).  Has anyone experienced this and solved it?  

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This is sort of an old post, but it should have an answer attached to it that relates to entry into TurboTax given the scenario.

You do, indeed, have to create separate K-1s in this instance, but it absolutely does not matter whether you enter the other items of income, deduction, credit, etc., on the K-1 for "Business" or the K-1 for "Rental real estate"; you simply need to make sure you do not enter the other items more than once.

Personally, I would enter all of the other items (interest, dividends, royalties) under the "Business" K-1 and then enter just the rental real estate income (loss) under the "Rental real estate" K-1.

[Smarc]

I agree 100%, that it doesn’t matter which one (business or real estate) and that you do not duplicate items.  I would only say to add the other items to whichever one most fits the business.  For example, if it is primarily a real estate enterprise, it’s more likely in the future that you may have a year with no ordinary business (Line 1) income, and in those years you wouldn’t need that k-1 copy. And vice versa.

I have a number of k-1’s that have to get split periodically. The important thing is that all the information gets entered only once.  You are adding the second k-1 copy for turbo tax’s input snafu, not the IRS’s snafu.