I had a similar issue where a member of the LLC made a recourse loan to the LLC. In the Partners' Liabilities SmartWorksheet on p. 6 of Form 1065 (below the balance sheet "Schedule L") the amount was there, but in RED. I could not for the life of me figure out what was wrong. After two hours and many searches later, I realized that there is a SMALL BOX to the left of the number.
Here's what I found:
Partners' Liabilities
The program allocates liabilities to all partners based on their year-end profit ratio. The program allocates all other liabilities ONLY to the general partners based on their year-end loss ratio. If you want to allocate the liabilities in a different manner, use the special allocation boxes.
NOTE: Loans from partners on line 19a, column d are treated as recourse debt on line D of the Partner's Liabilities Smart Worksheet. (This part was OK, but in RED for me, until...)
CAUTION - Limited Liability Companies: Recourse liabilities, entered or calculated to the Partner's Liabilities Smart Worksheet, page 6, line D will NOT be allocated to members unless a special allocation code is entered (i.e. entered in the tiny box to the left of the number). Enter a special allocation code ("P" for Profit percentage, "L" for Loss percentage, "O" for Ownership percentage, or any other ) in the column to the left of the amount.
As soon as I entered "O", the amount was proportionally added to each K-1, line K1 and all was well with the universe!
