TurboTax Business: Error Check problem/bug - re: Designation of Partnership Representative

[easyxpress]

I got into this recurring error check problem at the Designation of Partnership Representative form.

I have a revocable trust so the "Name of PR" is the trust name and the "US taxpayer identification number" is my social security number (SSN).

During Federal Review-Error Check, I see these errors:

Form 1065 p1-3: Designated indiv (name, address, city, state, zip, phone) should not be entered since the U.S. taxpayer identification number of PR is a SSN.

Ok, fair enough, and I removed all these indiv info as instructed. But when I run the error check again, I see these errors:

Form 1065 p1-3: Designated indiv (name, address, city, state, zip, phone) must be entered.

So these error checks just go in circle, non-stop.  This obviously is a bug in the software. But is there any workaround to resolve this?

[PatriciaV]

Yes, there is a work-around, as there is no ready solution within the main interview.

According to the On-Demand Guidance within TurboTax Business for the Designation of Partner Representative (right click on PR Name at the bottom of Form 1065 p1-3) --

To designate a partnership representative, either complete Part V of the Partnership Information Worksheet and check the Partnership Representative (PR) box OR check the "PR" (Partnership Representative) box for a partner on the Schedule K-1 Worksheet.

Note: If the partnership representative is an entity, complete the information for the individual that the partnership designates to act on the entity's behalf.

Because you prepare Schedule K-1 for at least one trust, you cannot opt out of the Centralized Partnership Audit Regime (Form 1065 p1-3 Line 29), which could resolve the situation.

Instead, open Forms Mode and confirm that the two forms mentioned above (Partnership Information Worksheet and Schedule K-1 Worksheet) contain the correct information. 

The PR checkbox on Schedule K-1 Worksheet is in the right-hand column under the Profit/Loss percentages as "Check applicable boxes:"

On the Information Worksheet, Part V, confirm that there is no SSN under the Member's information. Both the Partner and PR boxes must be checked.

Do not return to the Step-by-Step section for Partner/Member Information in case this action is resetting your entries. Save your return. Close, reopen, and run Federal Review again.

[easyxpress]

I tried everything you had suggested. Unfortunately, it doesn't work for me. In fact, initially, I was elated to see no Federal review error from the software, but as soon as I selected to e-File the Federal return, the exact errors came back. This is very strange and indeed a bug from the software. I hope they can fix this in a timely manner.

After much trial-and-errors, I did find the workaround or what-not-to-do. Basically, I can confirm that the software got into confusion, if and when the revocable TRUST is designated as PR. Since a revocable TRUST has the SSN (individual), not a TIN (business), I suspect this is the reason the software can't tell the difference. Therefore, at the interview screen, for the revocable TRUST, DON'T check the box saying "the member who has been designated as the partnership representative for the business".  After I did that, this is the workaround that found worked.

[PatriciaV]

Thanks for the clarification on the option that worked for a PR that is a trust.

[Rick19744]

@easyxpress that makes sense. 

This is due to the fact that the instructions for designating a PR indicate that the IRS  wants to see an individual designated; instructions also say if an entity, also provide the name, address, etc for an individual.  This is because this individual is the contact point for all IRS correspondence and tax matters.  The IRS can't speak or discuss issues with a trust, company, etc.

Maybe the answer here is that TT should have a notation that the PR must have an individual name.

[paulbarberini]

when I make K1 entries , I get error messages ie no dollar amount in z line 20 when there is an amount

[paulbarberini]

When the value of alternative minimum tax is enter as zero, it ask for a regular tax value. but turbo tax does not provide one

[sayreko]

I had the same error, this solution solved my issue using Forms mode

- Information Wks: only selected "Partner" box

- Sch K-1 Wks: under Check applicable boxes right side of form, only selected "General" box

- Form 1065 p1-3: completed first portion of Designation of Partnership Representative with SSN, no more errors 🙂

[easyxpress]

I reported this problem last year for the Tax Year 2021 version. Unfortunately, this bug wasn't fixed in the Tax Year 2022 version either, it's the same exact issue. I speculate it will be a loooong while before turbotax pays any attention to this. Meanwhile, you can use the workaround as described in this thread, it still works.