Business & farm

You'll want to create separate K-1s for each sub-entity.  There's a couple reasons for this:

  • The IRS rules on PTPs state that losses from one PTP can't be used to offset income from another.  So if you sum across all sub-entities, you can violate that rule.  Even though a parent PTP owns the shares of the sub-PTPs on your behalf, you still can't violate that rule.
  • If the parent sells off one of the sub-entities in the future, you'd be entitled to recognize any prior year suspended losses for that sub-entity.  That only works, though, if you've been keeping separate records.

You also mentioned entering each sub-entity with the "same partnership ID".  If you're referring to the 9-digit number that's tied to the PTP, usually the parent PTP provides IDs for each sub-PTP.

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**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!

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