If you have previously reported allocation percentages based on profit, you cannot change this on a subsequent return. The original choice should have been set according to the partnership agreement.
According to the IRS, "Allocate shares of income, gain, loss, deduction, or credit among the partners according to the partnership agreement for sharing income or loss generally."
If you need to specially allocate certain items of income or expenses, you can set up special allocations.
To do this, be sure to activate Special Allocations in step-by-step under Business Info tab >> About Your Business >> Makes special allocations.
Learn more about Special Allocations:
- Go to Partner/Member Information and click Done at the bottom of the Member Summary page.
- Continue to the page "How to Enter Special Allocations" and click "See Demo" at the bottom.
- Follow the example for Special Allocation by Amount.
- To confirm the allocations, open Statement A (Page 1) for each partner to see how your entry is being allocated.
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