Form 1065 - Schedule K - Line 19a

[milpride]

In Turbo Tax, when you enter the distributions from K1s received from other partnerships under K1 section, will the 19a on Form 1065-Schedule K be automatically populated with the sum of all distributions from K1s? OR do we have to reenter the the distribution information again here?

Please advise.

[tagteam]

I am presuming you are working with TurboTax Business. If so, then you need to manually enter the aggregate figure in Forms Mode in the Distributions of Cash and Property Options Smart Worksheet (see screenshot).

[milpride]

Thanks for the response. Yes, I am using Turbo Tax Business. I am confused now. When I entered the information for all the K1s, I entered the distribution amounts from each K1s under box 19 (as part of all other K1 entries). Wouldn't the Turbo Tax automatically sum up the numbers and enter it in Form 1065 Line 19a?

[tagteam]

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@milpride wrote:

....Wouldn't the Turbo Tax automatically sum up the numbers and enter it in Form 1065 Line 19a?

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No, actually that is an entry that you have to make manually in the appropriate line in Forms Mode. In fact, there should be verbiage somewhere on the K-1 (if you look at it in Forms Mode) that instructs you to enter the figure(s) manually.

[Anonymous · Accepted solution]

if partnership A receives distributions from partnerships B,C and D what goes on 19a is only what A distributes to its partners.   The source of the distributions is irrelevant for this line.  the distributions from B, C and D affect the basis in each of those partnerships and may or may not have their own tax implications.  

from 1065 instructions

 Line 19a. Distributions of cash and marketable securities. Enter on line 19a the
total distributions to each partner of cash and marketable securities 

[milpride]

Thanks @tagteam  and @Anonymous  for your quick responses. Now, it gives me more clarity on what it is and how it should be interpreted. Couple of follow-up questions based on HACKITOFF's partnership references:

1. If there are no distributions made to the members of Partnership A (i.e., the amount is held with the partnership account), should we still enter the total distributions received from B, C, D on line 19a? Because these distributions are already entered as part of K1 entries for B, C, D, , will it affect the partnership A's net income/loss if we do OR do not enter/recognize the total dist. amount on line 19a. 

2.  If we filed the tax return without this line 19a entry, does it demand an amendment to the return?

[Rick19744]

I agree with @Anonymous regarding the relevancy of receiving distributions from other partnerships and that it is only distributions made by your partnership to your specific partners that go on line 19a.

However, where I am not in agreement with @Anonymous is the statement that "the source of the distributions is irrelevant for this line."  It may not be relevant for this line, however, there are instances where the partnership may borrow $$ and then make distributions using those dollars.  This is known as debt financed distributions and this type of distribution is relevant and components of this type of distribution require special reporting.

May not apply here, but it is an important distinction.  Possibly for others reading this in the future.

[tagteam]

Re the comments by @Rick19744  and @Anonymous, the information contained therein is exactly why TurboTax does not automatically populate the line in Schedule K but, rather, instructs the user to manually enter the appropriate figure.

[qofmiwok]

I'm still a bit confused by this.  Our partnership sold a building it owned and distributed the proceeds to the partners.  Should this be entered on the K1 line 19 with an A code?  Or only if the distribution is in excess of basis?  

[Rick19744]

Based on the limited facts, it appears that the partnership is still in existence.

The partnership will determine the gain, report the gain on the partnership return and the K-1's.

Keep in mind that some of the gain may need to be reported as unrecaptured section 1250 gain.

The distribution is just reported as any other distribution; Schedule K-1 line 19 Code A.

[qofmiwok]

Thank you.  I kept reading that 19A distributions are not required to be reported.
  

The partnership is ending also but that doesn't happen until 2020.  Does TurboTax Business handle whatever needs to be filed for that?  (I did see that I should file a final return within 3 months of termination, but since 2020 tax forms aren't out would I use the 2019 forms?)

[Rick19744]

You are correct in that you need to file a short period return. 

In cases such as this, you would use the 2019 forms (assumes no 2020 forms have been released) and cross out the 2019 and manually add 2020 on each form.  As a result, you would then need to paper file the final return.