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ideal_trucks
Returning Member

Schedule K-1 Profit Percentage

I have an LLC with 2 partners.   It's a computer repair business where we get the share of the profit that we worked for.  So if I earned $100 and the partner earned $50,  our profit share on the K1 has been relavtive to that, not to the ownership percentage.  

This year, the other partner has decided to take off and didn't do any work.  I would like the K-1 to show 0% profit percentage, and he not now any taxes on his personal taxes, because he didn't make any money.  

In TurboTax I've entered that, but have an error check with the following message:  Schedule K-1 Worksheet: Initial/Final Profit %: Profit percentage before/after zero should be populated with the percentage that existed immediately before the partner's termination. 

What do I do? He is not being removed as a partner right now in the company.  

1 Best answer

Accepted Solutions
tagteam
Level 15

Schedule K-1 Profit Percentage

@ideal_trucks It does make sense, but you simply do not understand how to enter it.

 

To start, you indicate the partnership makes special allocations (as I believe you did). Subsequently, you need to enter Forms Mode and enter an "A" code on page 4 on Schedule K of Form 1065. Thereafter, you need to open the Schedule K-1 Worksheet and enter your allocation as 100% (by ratio) and the amount of income (which would also be 100% according to your original post). 

 

This is neither a typical Form 1065 scenario nor is it a simple return to prepare. If you cannot follow the demo, or the instructions above, contact Support (link below) and perhaps they can walk you through the procedure step by step.

 

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

View solution in original post

5 Replies
tagteam
Level 15

Schedule K-1 Profit Percentage

In the Business Info tab, you need to click About Your Business, and then scroll down and click the Edit button to the right of Makes special allocations. Change the default "No" to "Yes". Later, you should come across a screen that instructs you how to enter special allocations (go through the demo).

 

 

ideal_trucks
Returning Member

Schedule K-1 Profit Percentage

I went through the special allocations demo, and It didn't seem like it made sense to my situation.  We have to income, other than services rendered.  I simply did all the work this year, and will recieve 100% of profit, and he receives 0%.  

tagteam
Level 15

Schedule K-1 Profit Percentage

@ideal_trucks It does make sense, but you simply do not understand how to enter it.

 

To start, you indicate the partnership makes special allocations (as I believe you did). Subsequently, you need to enter Forms Mode and enter an "A" code on page 4 on Schedule K of Form 1065. Thereafter, you need to open the Schedule K-1 Worksheet and enter your allocation as 100% (by ratio) and the amount of income (which would also be 100% according to your original post). 

 

This is neither a typical Form 1065 scenario nor is it a simple return to prepare. If you cannot follow the demo, or the instructions above, contact Support (link below) and perhaps they can walk you through the procedure step by step.

 

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

View solution in original post

bethgjohnson
New Member

Schedule K-1 Profit Percentage

Schedule K-1 Worksheet: Initial/Final Profit %

 

The answers given to this question do not answer the question.

My business partner did not receive income this year. She still owns 50% of the business.

I checked "special allocations" 

For me - Started the year owning 50% of the business, 50% profit, 50%  - end of year:100% profits, 50% losses - at the end of the year I still own 50% of the business.

My business partner started the year owning 50% of the business, 50% profit, 50%  - end of year:0% profits, 50% losses - at the end of the year I still own 50% of the business.

I still get a message asking about 

Profit percentage before/after zero should be populated with the percentage that existed immediately before the partner's termination.

If I go into  Forms Mode I cannot find a page 4 to  enter an "A" code on Schedule K of Form 1065

 

tagteam
Level 15

Schedule K-1 Profit Percentage


@bethgjohnson wrote:

The answers given to this question do not answer the question.


Same advice @bethgjohnson: You should go through the demo (see screenshot below). If you do not understand how to complete the 1065 for your particular scenario, you should seek guidance from a tax professional.

 

 

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