Investors & landlords

If you are preparing a partnership return (Form 1065), then you will need to do allocations on the partner's level. Allocations are not allowed for S Corp tax returns.

Here is how to do it. 

1) Record the sale of the entire lot on Schedule D. The total gain will flow to Form 1065, page 4, line 9a (assuming Long-term gain). 

2) In Forms mode, find Schedule K-1 Wks for each partner. 

3) In the area of Special allocation either enter the percentage of what is being allocated to this specific partner under By Ratio. Or an actual dollar amount allocated to the partner under By Amount.

4) Do it for each partner. 

5) Return to Form 1065, page 4, line 9a, and enter either 1 (for the ratio) or A (for amount). This can actually be done before step 3. As long as you know whether you are going with Ratio or Amount and what line you are selecting. 

6) This will flow to the partner's Schedule K-1, line 9a. Who will, in turn, report it on their individual tax return. 

See screenshots below demonstrate a long-term gain of $60,000, with a 5% allocation to one of the partners. 

Form 1065, page 4.

Sch K-1 Wks

Schedule K-1 (each partner)