we received a K-1 that has a nonrecourse loan on Part II letter K of the k-1. How do I get this into turbo tax. This liability is not on the entities books, so the smart sheet liability section errors if I hard code it there.
are you saying the NRL is not on the partnership books but on the K-1? something is terribly wrong somewhere. if it's not on the books of the entity I don't see how it could possibly pop up on the k-1. numbers have to come from somewhere.
In TurboTax, you can fill out the liability section in Part II of the k-1, but you are wasting your time because Turbotax doesn't use it for anything. It does not compute tax basis which is critical. you have a negative capital account. Generally your share of the NRL would be added back to see if you have a positive tax basis, but if it doesn't exist there are tax consequences. . distributions during the year could become taxable. Losses may not be deductible due to at-risk limitations. This issue needs to be pursued because it significantly affects proper report for your income taxes.
Also if the capital accounts are negative shouldn't the ownership % be 0? Turbo tax errors out when I put zero for the % because it does not equal 100%
Nope. every partner owns a share of the partnership. 0 for everyone would indicate that none of the partners own any share of the partnership. The ownership %'s should have been established in the partnership agreement and that doesn't change unless something happens.
