I'm experiencing the same error. The problem is caused by several programming errors in TurboTax Business. Luckily, there is a workaround for it. At least it worked for me. Hope it works for you!
The short answer: if you're comfortable entering data in Forms view, and know how to get a Schedule K-1 the way it is supposed to look, do it there. Enter the partners' information right on Sch K-1 Wks which should then get their Schedule K-1s right.
If you must use Step-by-Step, first understand that it's just plain wrong. It gets disregarded entities and their beneficial owners all mixed up. And second, understand that you can to fix most of the errors in Step-by-Step, but not all of them. You must go to Forms view to fix at least one problem.
If you must use Step-by-Step, the data-entry for it is found in the tab Business Info > Partner/Member Information. Here under "Member Information," it asks for a Name and a Social Security Number. Obviously, a disregarded entity will not have an SSN, so that's your first clue things are messed-up in the programming. Yet the data entered here will correctly populate Sch K-1 Wks and then Line E and F of Schedule K-1. For disregarded entities, enter the name and SSN of the beneficial owner (e.g., for us, it's the person owning the single-member LLC which is the partner/member).
Yet you must still tell TTB that the member is a disregarded entity and not a person. So you *must* check the box "This member is not a person. It is an LLC or other business entity."
That will bring you to the next screen which asks you to enter the name and ID number of the beneficial owner of the disregarded entity. Don't. Here enter the name of the disregarded entity and its EIN. (It will format as an SSN, but don't worry, we'll fix it later.) The reason why you're entering the DE name and its TIN here is this data correctly populates Sch K-1 Wks and then Line H2 of Schedule K-1.
So now check Forms view, and you should see your data is in all the right places. But you may have a data validation error (if like me, it won't show until at the last moment when you try to efile). TTB will claim you have entered an invalid TIN for the disregarded entity which, of course, is just plain wrong.
To fix TTB's data validation error, to get the TIN of the disregarded entity correctly entered on Schedule K-1 H2, you've got to use Forms view. (If there's a way to fix it in Step-by-Step, neither I nor four TTB support representatives have found it.)
While in Forms view, open the Sch K-1 Wks and enter the correct EIN (in the correct XX-XXXXXXX format) for the DE for each partner there. It will then correctly populate to the Schedule K-1 line H2.
In sum, there are a number of problems here. First, in the Step-by-Step, TTB has gotten all mixed-up between the disregarded entity and its beneficial owner. Second, for line H2, TTB has what I'm presuming is an incorrect data validation format on the DE's TIN data field. It invalidates EINs and anything that doesn't comport with an SSN format.
These are huge and blatant programming errors. As one of the several TT support representatives I spoke with said, it appears these errors will effect a whole lot of TTB users. It seems that anyone using TTB to file a form 1065 with partners that are disregarded entities is going to experience this problem, whether they know it or not.
