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Level 2
posted Feb 18, 2022 9:54:51 PM

amending 1065 return to categorize partnership as passive

I did my first 1065 partnership tax return for 2020 on TurboTax.  Unfortunately, after discussing with my CPA today, I found out that I categorized the partners incorrectly.  Since my LLC is a holding company, therefore, it's passive, I was supposed to check the boxes that state that the partners are passive LLC members & not ACTIVE managers.  Therefore, on my 2020 1065, it showed a self-employment loss (income) in box 14 when, technically, there shouldn't be anything there since my LLC is a passive entity.  I tried to go back in to TurboTax Business 2020 to amend the return but it didn't allow me to change the partnership selection.

 

How do I do/fix this?

 

Thank you.

0 2 512
1 Best answer
Expert Alumni
Feb 19, 2022 2:06:11 PM

You need to change each of the members not the partnership selection.  To make the partners/members passive please follow these steps:

  1. Within your partnership return, go to Partner/Member Information under Business Info.
  2. Click Edit on the first member you want to change.
  3. Click Continue through the Member Information screen.
  4. Change the member to Another LLC member then click Continue.
  5. Choose A member that is not actively involved in running the business and Continue.
  6. Click Continue through the rest of the information for the partner.
  7. Do the same steps for the other partners from the Member Summary screen.

2 Replies
Expert Alumni
Feb 19, 2022 2:06:11 PM

You need to change each of the members not the partnership selection.  To make the partners/members passive please follow these steps:

  1. Within your partnership return, go to Partner/Member Information under Business Info.
  2. Click Edit on the first member you want to change.
  3. Click Continue through the Member Information screen.
  4. Change the member to Another LLC member then click Continue.
  5. Choose A member that is not actively involved in running the business and Continue.
  6. Click Continue through the rest of the information for the partner.
  7. Do the same steps for the other partners from the Member Summary screen.

Level 2
Apr 11, 2023 12:01:43 PM

sorry for the delay in my response.  @AliciaP1 , thank you for your instructions.