How to handle split Schedule K-1 for final partnership disposition in TurboTax?

kbsanders · ‎March 29, 2021

For the past 3 years, as suggested by TurboTax, I've split my K-1 forms into two parts and entered them separately. One K-1 for business activity (Box 1) and one for rental activity (Box 2).

Per the software:

"Since your K-1 reports amounts in more than one of boxes 1, 2, or 3, the partnership/LLC is involved in more than one type of activity. You should treat each activity separately in TurboTax."

This year the partnership has been disposed and I have received a "merger/redemption" distribution and my final K-1.

How do I properly record the disposition in TurboTax with a split K-1, with regards to the sale price, partnership basis, etc.?

Certainly I don't want to enter the disposition figures twice (once on each half of the split K-1), right?

DaveF1006 · ‎March 29, 2021

It depends. it is perfectly acceptable to split the disposition figures in half to report on each K-1 in regards to the sale price, partnership basis etc.

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View solution in original post

kbsanders · ‎March 29, 2021

Thank you for the insight.

Also, I'm not exactly sure how to characterize the disposition.

I redeemed 100% of my interest in the partnership paid to me via a distribution and received a final K-1, but the partnership didn't actually sell the underlying assets. I assume it just affected the remaining partners share percentage.

The choices in TT are

No entry
Complete disposition
Disposition was not via a sale
Sold and am receiving payments.

I tried "Disposition was not via a sale", but then TT doesn't ask for my basis and doesn't check the boxes on Schedule E (Part II)(28)(e) for basis computation even though the instruction on the form state "Note: If you report a loss, receive a distribution, dispose of stock, or receive a loan repayment from an S corporation, you must check the box in column (e) on line 28 and attach the required basis computation.".

The distribution amount I received is on the final K-1 in box 19 with code A and I recorded that in TurboTax.

How to handle split Schedule K-1 for final partnership disposition in TurboTax?

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