Hi everyone --
I had -65K in retained earnings for 2021. My balance sheet is in balance according to TT, which is great news. However, I keep getting this error about not allowing recoursed debt to partners without an allocation code or reclassifying it as nonrecourse debt.
I found a great article about reclassifying, but it doesn't work for me. I went to the Partners Worksheet in the 1065, where I was instructed to move the items from Row D (recourse debt) to Row C (nonrecourse debt).
Unfortunately for me -- TurboTax will allow me to add a number in nonrecourse debt, but will not allow me to modify the number in Row D (recourse debt).
How to proceed with this? Is this the right time to use an allocation code? I was advised earlier to reclassify and not use one of those code (P,L,O).
I seem to be at an impasse over this issue. In reality, the company took a loss. Why this should be looked at as debt at all, I am unsure. But TT has placed it firmly there. Very firmly.
Thanks for your time.
