I am not an accountant or an attorney, but page 10 of this reference would seem to support TurboTax's handling of that income: http://apps.americanbar.org/buslaw/committees/CL690000pub/newsletter/200907/richter.pdf
You may want to consult the LLC's accountant with your questions.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
