Y'all are, of course, correct that an M-1 entry wouldn't be an override. In my head, I think I was worried about doing the M-1 entries for some reason and was thinking an override would be simpler. And it may still have required an override if done that way because there is already a Guaranteed Payments entry on M-1.
Alas, I believe I have found an even more elegant solution, which I shall explain here for posterity:
- On the Guaranteed Payments screen (under Federal Taxes: Deductions), I entered only the amount for business activity deductible GPs next to From Trade or Business Activities. I entered all rental activity GPs on the next line.
- Under Allocate by Amount, I entered ALL GPs paid to each partner.
- In Forms mode, I opened Form 1065 p4-5. On Schedule K line 4a, the number under "Direct Entry Deducted Elsewhere" for service GPs was red. That is because it was equal to the total GPs entered in step 1 above but inconsistent with the total GPs entered in my step 2.
- I clicked on the red number then the + box to add supporting details. Under supporting details, I added 3 lines--one each for rental activity deductible GPs, rental activity capitalized GPs, and business activity capitalized GPs. Technically, this is an override, but it is one that makes everything line up correctly plus adds the detailed numbers. (Show your work!)
One important note: TurboTax backtracked and put my total from this box back into the Rental Activity GPs line on the Step-by-Step GPs screen, but this should not have any negative effect on your return as best I can tell. So, you could enter all GPs except deductible business activity GPs under rental activity on the step-by-step screen. But I think you would still want to add the supporting details on line 4a of the Schedule K form.
