Thanks for the reply. When I spoke to support at Intuit they suggested a similar option (but it was my decision). In the end, changing the numbers did not make any difference to tax due/refunded. In other words, there was no material impact.
Prior to your reply, I did contact the K-1 provider again and received a curt reply from the same support person that they don't provide tax advice. To me it seemed that they didn't appreciate having their numbers challenged.
I did find this information during my research and included this in my follow up e-mail to them and highlighted the phrase about qualified dividends:
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According to the IRS 1065 Instructions for Line 6a:
Line 6a. Ordinary Dividends Enter only taxable ordinary dividends on line 6a, including any qualified dividends reported on line 6b. Do not include any dividend equivalents reported on line 6c. Schedule K-1. Enter each partner's distributive share of ordinary dividends in box 6a of Schedule K-1.
So, my thinking is that if line 6a on the overall 1065 form must include anything reported on line 6b, then line 6a must always be greater than line 6b. Then when the allocation is made based on partner percentage, then some part of the total is allocated to the partner. Even if there is a moving day-to-day allocation based on the partners’ unit allocations and the partnership earns a dividend on that day, that dividend is either qualified or not and some percentage of that dividend is allocated to the partners based on their ownership percentages at that time. Still, the total of that dividend on that date should be added to Ordinary Dividends and if it is Qualified then it should be added to the Qualified Dividends too. I am just not following the mathematical logic here.
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Perhaps there is some really odd logic in this case, but based on the definition in the K-1 instructions, something seems incorrect.
In any case, thanks again for the advice. It turned out to be the most logical course of action for me. It wasn't worth the effort to attempt to find a different agent especially since it didn't make a material impact.
