turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

1120S K-1 with multiple activities in Section 199A

I have a K-1 (1120S) that has the following filled in:

  • Box 1 (ordinary business loss)
  • Box 4 (interest income)
  • Box 5a (ordinary dividends)
  • Box 5b (qualified dividends)
  • Box 6 (royalties)
  • Box 8a (net long-term capital loss)
  • Box 12 (other deductions) - Code ZZ with a statement of "depletion percentage"
  • Box 16 (items affecting shareholder basis) - Code D (distributions)
  • Box 17 (other information)
    • Code A (investiment income)
    • Code V (section 199A information)
    • Code AC (gross receipts) - statement only includes gross receipts from previous 3 years (not current year), which seems odd

There's also a Shareholder Rental Report with a different entity name (let's call it Company B) from the S Corp  listed with the royalty amount from Box 6.

 

In the Section 199A Information statement, there are 2 activities listed along with the following amounts:

  • Column A: Page 1 Activity
    • Ordinary business loss from Box 1
  • Column B: Company B
    • Royalty income from Box 6
    • Other deductions from Box 12

At first I created a single K-1 in TurboTax and entered all this information in Section 199A essentially as a single activity. However, I noticed the following statement in TurboTax for Section D1 (Qualified Business Income Deduction - Statement A Information):

 

"IMPORTANT: If the statement reports information from more than one trade or business, please enter each activity on a separate K-1 entry worksheet."

 

I have also found other forum posts discussing how when there are multiple activities, the single K-1 should be split into multiple K-1s in TurboTax and the appropiate information for each activity reported on the appropriate K-1 (such as this one).

 

Now to my question which I have not been able to find in the other related forum posts. If I am supposed to split my single K-1 into multiple K-1s, what information do I enter for entity?

  1. Do I have multiple K-1s with my S Corp information, including name, address, EIN, shareholder percentage? Then on the K-1 that has the Section 199A values for Company B, enter the name of Company B in the linked QBI component?
  2. Or do I have one K-1 with my S Corp information and the other K-1 with the name of Company B as the K-1 name, but with the S Corp's name, address, and EIN (the K-1 does not have a EIN listed for Company B)? Do I include the shareholder percentage on the Company B K-1? Just like the above option, the Company B K-1 would have a linked QBI component with the name of Company B.

The end result of both options is that on Form 8995, both the S Corp and Company B are listed with their appropriate QBI income/loss. However, in both cases Company B's EIN is the S Corp's since the K-1 doesn't list a separate EIN for Company B.

 

I think the only difference in the output of the two options is what is listed on Schedule E. With option 1, the S Corp is listed twice in Part II (but with the appropriate values). With option 2, the S Corp and Company B are both listed (again with appropriate values). However, again, the S Corp EIN is listed for both in both cases.

 

I'm not sure if there are any other implications to option 1 or 2, so I'd really like to know which is better (or something else entirely). Thanks!

 

On a side note, it'd be really helpful if TurboTax just supported entering multiple activities in the Section 199A information.

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

3 Replies
dsoile
Employee Tax Expert

1120S K-1 with multiple activities in Section 199A

Hello ashughes 

 

You will only have one K-1 to report on your 1040, so you do not need to split your K-1 to multiple ones. The S-Corp has ownership stake at Company B, thus the S-Corp owns Company B. This means the S-Corp received X amounts in royalties from Company B activity, which in turn is passed through to you, since you have ownership stake in the S-Corp.  

1120S K-1 with multiple activities in Section 199A

@dsoile Thanks for the response!

 

I've received conflicting information about Company B depending on who I ask. The S Corp owns a rock quarry. I've spoken with the company in charge of mining the quarry (not listed anywhere on the K-1) and they said Company B is not owned by the S Corp. I believe they said Company B rents the land from the S Corp and pays royalties to the S Corp. However, when I spoke with the accountant that prepared the K-1, they said the S Corp does own Company B. My cousin (the S Corp treasurer) said they're inclined to believe the company that does the mining since they're on the ground.

 

Regardless, there is not a way in TurboTax to split the Section 199A information so that it's entered in the same way it's presented on the K-1 (as two separate activities). As I mentioned, in TurboTax it states:

 

"IMPORTANT: If the statement reports information from more than one trade or business, please enter each activity on a separate K-1 entry worksheet."

 

That is why I was bringing up entering in more than one K-1 in TurboTax even though I only have a single K-1. I also mentioned that this advice has been given in other forum posts. However, I'm just not sure what the best way to do this is (see options 1 and 2 in my original post).

dsoile
Employee Tax Expert

1120S K-1 with multiple activities in Section 199A

Good morning ashughes

 

My apologies for late reply. Thank you for updating on the circumstances behind Company B.

 

I have provided a source detailing solution for similar situation. Multiple activities Sect 199A

 

 

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies