Lisa995 is correct. You can show a negative number in Line 21 with the caption, “Distribution to Nominee YYY, SSN xxx-xx-xxxx.” The negative number on Line 21 will adjust the income of the reported payee to the correct amount. The reported payee will issue a Form 1099-MISC to the nominee payee for nominee’s share of the distribution.
You can enter a negative income adjustment with the following menu path:
- Federal Taxes
- Wages & Income
- Less Common Income
- Miscellaneous Income
- Other Reportable Income
- Other Taxable Income
- Description = “Distribution to Nominee YYY, SSN xxx-xx-xxxx”
- Amount = -$xxx
TurboTax will transfer this to your Form 1040, Line 21, Page 1.
You can e-file with this approach because the disclosure is on the face of the return at Line 21. Consequently, you do not need to attach a statement.