Are K1 income and expenses double taxed?

[billsey]

I am a member of an LLC and I noticed that the entry on line 14C is being used to generate some taxes (at least if I manually delete the entry it lowers my tax liability). 14A is $325 for the tax years, 14C $11,561. 14C seems to be gross receipts for the year, before any deductions are taken, 14A reflects my actual portion of the earnings from the LLC. Why would taxes be taken from gross receipts, then again from actual earnings?

[Rick19744 · Accepted solution]

While I cannot see your input or your tax return, your facts don't correlate to what should be happening.

Line 14A would be the input figure you should be using.  Line 14 code B and C are only used for a certain sector of farmers.  Many software vendors include a figure on line 14 code C regardless of whether the activity is farming.

As such, I would ignore your K-1 line 14 code C figure.

Line 14 in general is what determines the amount of self-employment tax is due along with any regular tax.

[billsey]

So I'm guessing if there is an entry in 14C it means the business return was done incorrectly, since there's nothing to do with a farm there at all? Or is it something I'm doing on the personal return that's taking the 14C data and calculating as if it were farm income?

[Rick19744]

No.  As stated in my original response, some softwares automatically generate this line even if it will not be used by the taxpayer.  I assume it is programmed this way to avoid having a separate computation when it is a farm.

Your return should not be using this in the calculation of taxable income.  As stated in my original response, just don't input this into the TT software if you believe there is an issue.