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How do I enter "net income(loss)" in line 3, Form 1065 Section M2? I put in the correct figure but turbotax says it's an error, what is wrong?

 
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PatriciaV
Employee Tax Expert

How do I enter "net income(loss)" in line 3, Form 1065 Section M2? I put in the correct figure but turbotax says it's an error, what is wrong?

What kind of error appears if you manually enter a number for Line 3? 

The entry usually flows from the Smart Worksheet above Line 1 - Line G Net income (loss) (tax basis). If you need to adjust this number, enter your changes on the Worksheet.

 

If you right-click on the box for Schedule M-2 Line 3 and choose "About", the On Demand Tax Guidance (Tax Help) provides this information:

 

The program calculates and enters amounts on lines 1, 2, 3, 6a, and 6b, based on information entered elsewhere on the return. Refer to Data Source (from the Help menu) to see where each amount comes from.

 

Note: Overriding amounts entered on Schedule M-2 causes the calculation of Schedule K-1, line L, to be incorrect.


Form 1065, Page 6, Schedule M-2, Line 3, Net income (loss)


Important note: If the net income shown on Schedule M-1 or M-3 does not reflect the net income (loss) used in maintaining the partners' tax basis capital accounts, the amount on Schedule M-2 must be adjusted to reflect the amount for tax basis capital accounts. The program will make the adjustments from the Schedule M-2, Line 3 Smart Worksheet. The adjusted amount will be used for Schedule K-1, Section L. All amounts on Schedule K-1, Section L, must now be computed using tax basis capital accounts.

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