Yes, you can allocate specific income/loss to each partner. To do this, you'll need two income statements - one for the period with all partners and another for the period after the partner left. The combined totals should match your actual year-end income statement.
You will need to manually calculate and specifically allocate Schedule K-1 lines items for each period to reflect the actual activity that should be reported to each partner.
First, be sure to activate Special Allocations in step-by-step under Business Info tab >> About Your Business >> Makes special allocations.
To learn more about Special Allocations:
- Go to Partner/Member Information and click Done at the bottom of the Member Summary page.
- Continue to the page "How to Enter Special Allocations" and click "See Demo" at the bottom.
- Follow the example for Special Allocation by Amount.
Special Allocations -- By Amount
Use this section to allocate items reported on Schedule K using an amount rather than by year-end profit, loss, or ownership percentages or other ratio. Enter special allocation amounts in fields A-D. Use the format XXXXX to represent an amount (for example, enter 10,000 for $10,000).
You will need a code for each item of income/expense that appears on Schedule K-1 for each period. If you have only ordinary income to allocate, use two codes - one for the period with the loss and another for the period with a gain.
Example: To specially allocate Ordinary Income on Schedule K by dollar amount, perform the following steps:
(1) In the Sch K-1 Wks - Special Allocations columns, enter an amount in field A to designate the allocation to each partner. Check that the total on the bottom of the page equals your total allocation amount for each code.
(2) On Schedule K, line 1 enter an A (to refer to the special allocation field number) in the SA field to the left of the amount line. Repeat for each Schedule K-1.
(3) Note: After entering codes for all partners who will receive a special allocation, refer to the Totals for All Schedules K-1, Total special allocations and verify that the total amounts for each line used (A through D) totals the amount entered on Schedule K.
The overall allocation summary appears on the Sch K Reconcile worksheet.
If this process seems too complicated, consider upgrading to TurboTax Live Assisted Business, which provides a tax expert to walk you through the steps.
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