(doing form 1065 and K-1s) specifically Partnership Schedule K worksheet Line 14a Calculating Self-Employment Earnings
On the above said worksheet my LLC shows ordinary business income/loss (for a General Partner) on 1a as negative amount (-104) (i.e. the amount of income with expenses subtracted)
Ok good so far, then on a sub-delineation suffix of line 4 it correctly shows the special allocation (guaranteed) pmt of 68. Then it says combine the specified lines so (-104) + 68 = (-36).
OK great that shows me where the (-36) came from on the K-1 in Box 14 code A.
But where does the 67 value for Box 14 code C come from ?
I.e. the schedule K-1 form Box 14 has,
A (-36)
C 67
If it helps, my ordinary income for the LLC was 135. It's main income is passive. I don't see any worksheet where this 67 was ?
Unless you are filing as a farmer, who have special rules for estimated tax payments, you can ignore line 14 code C.
When you look at what this is, reflected in the instructions to the K-1, this is GROSS nonfarm income. Based on your facts, it looks like this amount is also correct; 135 / 2 = 67.
These amounts are typically automatically populated by most tax software packages..
Unless you are filing as a farmer, who have special rules for estimated tax payments, you can ignore line 14 code C.
When you look at what this is, reflected in the instructions to the K-1, this is GROSS nonfarm income. Based on your facts, it looks like this amount is also correct; 135 / 2 = 67.
These amounts are typically automatically populated by most tax software packages..
Thanks Rick19744 for that excellent answer. I did find info how some software's calculate this amt. I attempted previously to answer my own question with a description of what I found. But this site's buggy (or else my answer was deleted by moderators). At first my answer posted but then on edit it just disappeared and never came back. I later attempted to repost the answer and but it never showed. Not sure what happened.
Also have no idea why it posted my comment twice, I edited this one.
Box 14 of the partner’s K-1 with an entry C shows profit before deductions. Line 14c is the gross nonfarm income for a general partner. It is needed for the partners to figure their net earnings from self-employment under the nonfarm optional method on their 1040 returns. How to calculate it:
1. Form 1065, page 1, line 8 Total Income (loss) multiplied by the ownership percentage rate (in decimal form) of the partner
2. Plus Form 1065, page 4, Schedule K - Partners' Distributive Share Items, line 3a Other gross rental income(loss)
3. Minus Form 1065, page 1, line 5 - Net farm profit(loss) and line 6 - Net gain(loss) rom Form 4797, Part ii, Line 17.
Limited partners don't have amounts allocated on 14c.
You wrote: Unless you are filing as a farmer, who have special rules for estimated tax payments, you can ignore line 14 code C.
First, 14C doesn't have to do with Estimated Tax Payments; the method is used to figure your net earnings from self-employment for calculation of self-employment tax. Further, you don't need to be a farmer to apply the alternate method of calculating self employment tax.
IRS Instructions say:
You may be able to use this method to figure your net earnings from nonfarm self-employment if your net nonfarm profits were less than $6,107 and also less than 72.189% of your gross nonfarm income. Then the instructions go on to give you the calculation method.