How to enter multiple Sec 199 passthru entities

[Austrian53]

On a K-1 I received there are multiple pass-thru businesses owned by the partnership listed that have Sec 199 Incomes. I have not found a way to enter more than 1 pass-thru entity under Box 20, Code Z after clicking 'The Income comes from another business'. Am I missing something?

[DaveF1006 · Accepted solution]

If there are multiple businesses to report, you will need to produce a K1's for each of those businesses:

1. You will report the first K1 with the partnership information, EIN etc. Also you will record all the boxes that have income in them (1-20) Record code Z in the first K1 and report the income comes from another business. You will then be asked to record the name and EIN of that business and then fill in the remaining information regarding the 199A income.
2. To record the second business, create another K1 with the information about the partnership but leave the boxes blank except for Box 20 Code Z information. Here you will record the information about the business, EIN, and so on and so forth. 
3. Repeat this process until you finish reporting all of the multiple businesses that has eligible 199A section income reported on that single K1 sent to you by the partnership.

[sbilyeu]

To be clear, in your second instruction below, when you say "create another K1 with the information about the partnership", do you mean create a second K1 for the original partnership that is reporting multiple businesses on their 199A schedule?  

2. To record the second business, create another K1 with the information about the partnership but leave the boxes blank except for Box 20 Code Z information. Here you will record the information about the business, EIN, and so on and so forth. 

[sbilyeu]

Never mind, I believe I found your answer in a reply to a similar message:

You are going to need to report this on another K1 even though it is the same partnership. In the second K1, you will need to fill out the name and EIN of the partnership but then you only report the transaction in box 20  regarding the second business.

[Max_defender]

I have many (~20) passthrough entries.  It is  rental real estate LLC.

Some entries has:

Rental income, W-2 wages, , unadjusted basis of assets.

others have  section 1231 gain, "other income"

Of the 3-4 numbers, which goes in to the box 20, code z field?

Looks like I need a K1 for each entry?  Horrible!

[JamesG1]

I assume that this is a partnership?  It does sound like you will be entering multiple K-1 entries.

Follow this procedure for a partnership K-1 with box 20 code Z: 

• Enter your code Z on the box 20 screen.  You don't need to enter an amount on that box 20 screen, but you do need to click Continue after you have entered the code Z.   It does not hurt anything if you have an amount on the box 20 screen for code Z, but the amount you enter there is not processed. 
• The next screen is Describe the Partnership and the next screen is We see you have Section 199A income and then you should get We need some information about your 199A income, followed by Let's check for some uncommon adjustments.  When you get to those last two screens, when you check the box on a line, other boxes will open up to enter the amounts from your Section 199-A Statement/STMT.

Many times you enter:

• Ordinary business income (loss) from the business,
• W-2 wages for this business, and
• UBI of qualified property for this business.

Your K-1 may be structured as follows where box 1 or box 2 reports the total of the three entities but attachments break out the income by entity.

                     K-1        Main partnership                     A                 B   

Box 1        1,000                      500                            200             300  

During the first part of the K-1 entry, all the separate K-1s use the name, address, and EIN of the main partnership shown on the K-1 you actually received.  Enter each additional Schedule K-1 just like the first.  Capital information is only reported on the main partnership.

At the screen We see you have Section 199A income, 

• You will click The income comes from the partnership that generated this K-1 for the main partnership,
• You will click The income comes from another business for the other two partnerships.

The separate section 199-A statement that you received for box 20 code Z should already split the Section 199-A amounts between the entities, so you enter the Section 199-A amounts for each entity on the K-1 you have created for that entity.

Note that when you enter each K-1, you will encounter the question Is the business that generated the Section 199-A income a separate business owned by the partnership? screen.  TurboTax is asking if the Section 199-A income was passed through to the partnership sending you the K-1 by another partnership, S-Corp, or trust; versus being generated by the business operations of the partnership that sent you the K-1.  So, on one of the K-1s you enter you will answer that it is from the main partnership, and on the others you will enter that it is from a pass through entity.  TurboTax will ask for the name and EIN of each pass through entity.

See also this TurboTax Help.

[ren12]

@JamesG1 

Thank you for the informative post.  So to clarify, lets say I received a K1 from "Company A" and in box 20 I have code "Z" .  Code Z takes me to Section 199 A, where there are several items such as rental income, W-2 wages, etc from a passthrough entity we'll call "Company B".

I put all of the information from "Company A" who issued my K1 into Turbotax such as EIN, and the amounts listed in boxes 1-20 which takes me to a screen that says "We see you have section 199A income".   Do I click the "This income is from another business"  radio button and then put in the pass through entity Name ("Company B") and EIN in the next page and the  amounts from the 199A form?

Then when this is complete, I go back and select "Add Another K-1" and complete a second K1 using the passthrough entity information (Name, EIN, etc.) for "Company B".   But where do I type in the rental income, W2 wages, etc. from "Company B"?

Thank you.

[davidtoby]

@DaveF1006 When you say for the second and later K1s to include the information about the partnership but leave the boxes blank except for Box 20, code Z, does this mean: Include just the name and EIN of the partnership (and maybe address) (as another poster suggests) from boxes A through D on the K1 I have received, or also include the information about the partner in boxes E through N, and just leave Boxes 1 through 19 empty? It appears impossible to skip all of the partner info, because we have to select limited or general partner, and domestic or foreign, to advance through TurboTax. Then I get to the percentage of share entry, and I don't know if I should repeat that info as well as share of liabilities and capital account info (and TurboTax says that Ending Nonrecourse Liabilitys is mandatory, while the other entries are not) on each K1 or just the first one.

Thanks in advance!

[JamesG1]

@ren12

Sounds like company A is the 'main partnership.  Enter company A information including at the screen We see you have Section 199A income.  You will click The income comes from the partnership that generated this K-1 for the main partnership.

The second K-1 entry will be for company B.  This entry includes the rental income and associated expenses.  Enter company B information including at the screen We see you have Section 199A income.  This is the passthrough entity and has a different EIN.  This is the entry for which you will click The income comes from another business.

Hopefully, you received an attached statement that breaks down incomes and expenses for each company that total the amounts on your original K-1.

[DaveF1006]

@davidtoby  Hi David: I probably didn't make my post clear as I should have and hopefully this will clear up some of the misconceptions.

1. If you have multiple information in Box 20 code, involving the same partnership, this is what you should do.
2. In the first K1, include all the information including the partnership information including EIN, address etc. 
3. Include all information in Boxes 1-20 that needs to be included. In Box 20, Pick Code Z from the drop down and include all information that is required from the supplemental information. Initially leave the amount blank as that will autofill once you complete the information necessary in Box 20.
4. For a second K-1 involving the same partnership, fill in the Partnership information EIN address etc. but leave all boxes blank except Box 20.  Fill in that information involving Box 20 code Z with the business information and so on and so forth.
5. Do that for the remaining K1's, involving the same partnership.

[Edited 04-11-2021|11:17 AM PST]

[davidtoby]

@DaveF1006  Ok, so here's what I did. I also talked to an expert through TT's support, and the expert specified that I should split the Box 2 income/loss among the various K-1 entries to align with the numbers from the passthrough for each entry, to make sure I can claim the full extent of available deductions. I'm not sure if this was right, because despite overall losses, my taxes owed went up (just $4) after all these entries. Using example numbers, I had:

K-1 from the MAIN, only partnership of which I am a member shows -$2,000 in rental losses in Box 2 and -$1,000 in Section 1231 loss in box 10. All the rental losses are attributable to pass-throughs, lets call them Passthrough A through Passthrough E, each with -$400 of rental loss and their own W-2 wage info. $50 of the Section 1231 loss is attributable to a single passthrough, Passthrough E.

I entered a total of six K-1s.

K-1 #1: MAIN partnership info, including all the partner info in Part II from the K-1 I received (profit share, liability share, capital info). I did not enter anything in Box 2 (I think I picked "other," and it led to no prompt, but could go back and enter 0 for Box 2 if that is better). I entered -$950 of Section 1231 loss in Box 10.

K-1 #2: MAIN partnership name, EIN, address. Checked the limited and domestic partner boxes. Skipped the profit, liability, and capital info. Checked only box 20, entered code Z, left amount blank. Selected that the 199A info comes from another business. Entered the name Passthrough A EIN. Entered -$400 of rental loss, entered the W-2 wage info, and the unadjusted basis of assets.

K-1 #3, #4, and #5: Same as #2, with the respective passthrough names (Passthroughs B, C, and D)

K-1 #6: Same as above, except also adding the -$50 Section 1231 loss in the 199A info.

This aligns the passthrough info with the info in box 2 and box 10 for the respective K-1 entries. But, like I said above, despite overall losses and passthrough wages, my taxes owed went up a handful of dollars, making me question if this was the best approach.

Did I do this correctly? Should one of the passthroughs just be listed on K-1 #1, so I have a total of five K-1 entries? Should the Box 2 and Box 10 info be totaled and included just on K-1 #1, rather than split up to align with the passthrough being reported on each respective one?

[DaveF1006]

It depends. Yes, one of the passthroughs can be listed on the original K1 so that you only have a total of five K1 entries. Boxes 2 and Box 10 should only be reported also on the initial K1. The remaining 4 K1's just should have the partnership information and the information in Box 20 code Z. The remaining four should have no information other than that.

[peterbley]

So I guess more people have that problem now  than when I posted it some time ago... I guess there really is not an easy work around for anybody that is a LP in a Real Estate LP with (what they all have...) multiple Sec 199 sub-ventures...

Hopefully Intuit will decide on not doing 'absolutely necessary' updates on TurboTax but also do important ones for a minority, but important, customer group....

[markmartian]

@DaveF1006

I'm curious why on the Box 20 Z statement, multiple pass-through entity EINs need to be listed on separate K-1 entries?

How does Ttax use all those entries?  What is the calculation?  Is it just in case you exceed the income threshold ($157500) for the QBI deduction, and therefore have to do the more complex w-2, UBIA, SSTB and basis calculations?  For lower income filers, can't the separate EIN entries be ignored and just use the combined totals of each of the "Ordinary Income, Rental Income, W-2 Wages, Self Employment Earnings and UBIA" categories?   And if not, what are the separate EIN entries accomplishing?  Thank you.

[mdaramola]

I'm glad I found this post, but this highlights one of the  many ways this software is severely lacking. For most individuals like me dealing with publicly trade partnerships (PTP) for which our K-1s have 199A income, there are several entitles involved. This means that the data for each of these has to be entered in a very inefficient manner that does not make much sense (because we did not receive individual K-1s for these entities). In my case, I have 12 separate businesses/entities apart from the main publicly traded partnership.

But this isn't even my gripe for this post.

When creating each new K-1, it requires address information for each of the entities. This is not information that's provided on a supplemental schedules with our K-1s and I'm not sure I care enough to reach out to Investor relations of the PTP to obtain information that shouldn't be required for the purposes of the QBI calculation. I'm curious to know if I just use the same address as the main partnership, whether that will mess anything up in terms of the e-file because I don't know exactly what will get transmitted to the IRS....