How to reclassify debt as nonrecourse on partners' liabilities smart worksheet?

aminormail2 — Wed, 04 Feb 2026 07:59:28 GMT

reclassify debt as nonrecourse on partners' liabilities smart worksheet

Re: How to reclassify debt as nonrecourse on partners' liabilities smart worksheet?

PatriciaV — Mon, 19 Jan 2026 17:55:39 GMT

If you need to change the character of the partners' liabilities, you may need to adjust your balance sheet entries using Forms Mode.

Click the Forms icon in the TurboTax Business header, then locate "Form 1065 p4-5" in the left column.
Click the form name to open it in the large window.
Scroll down to Schedule L (Balance Sheet per Books).
Confirm your entries for the debt:
1. Any amount entered on Lines 16 or 19b will be reported as qualified non-recourse.
2. Line 17(b): Recourse, if payable in less than a year
3. Line 20(b): Recourse, if payable in 1 year or more.
4. Line 18: all other Nonrecourse debt.
Now scroll down to the Partners' Liabilities Smart Worksheet just below the Balance Sheet.
Line B Nonrecourse: from Line 18 of the balance sheet.
Line C Qualified Nonrecourse: from Line 16 or 19b.
Line D Recourse: The total of column (b), lines 15, 17, 19a and 20 (beginning) and column (d), lines 15, 17, 19a and 20 (ending). These totals cannot be changed.
Nonrecourse liabilities are allocated to all partners according to their profit percentage.
Other liabilities are allocated only to general partners according to their loss percentage, unless you enter a code in the small box in front of the number ("P" for Profit percentage, "L" for Loss percentage, "O" for Ownership percentage, or a custom allocation you entered previously).
The debt will be allocated to the individual partners' capital accounts (and Schedule K-1) based on the applicable percentage.

Note that you should edit only numbers that appear in blue. Overriding calculated numbers invalidates the return for e-filing (you will need to mail the return). This is an IRS constraint.

topic How to reclassify debt as nonrecourse on partners' liabilities smart worksheet? in Business & farm

How to reclassify debt as nonrecourse on partners' liabilities smart worksheet?

Re: How to reclassify debt as nonrecourse on partners' liabilities smart worksheet?