topic We have a two-member LLC where I am responsible for 100% losses. LLC made a loss but Turbotax is allocating the losses between both the members (on K-1) in Business & farm

We have a two-member LLC where I am responsible for 100% losses. LLC made a loss but Turbotax is allocating the losses between both the members (on K-1)

emailofashishk — Tue, 10 Sep 2019 12:36:46 GMT

Line J is correct on both the K-1. My K-1 says 100% for loss, his K-1 says 0% for loss. Still Box 1 shows a negative number on both the K-1s.

Re: We have a two-member LLC where I am responsible for 100% losses. LLC made a loss but Turbotax is allocating the losses between both the members (on K-1)

Anonymous_ — Tue, 10 Sep 2019 15:52:43 GMT

@emailofashishk wrote:
Line J is correct on both the K-1. My K-1 says 100% for loss, his K-1 says 0% for loss. Still Box 1 shows a negative number on both the K-1s.

In order to get the result you desire in TurboTax Business, you need to enter 100% as your profit percentage and 0% for his profit percentage; the default is for the percentage of losses to follow the percentage of profits.

The only other method of achieving your desired result would be to retain the percentages you entered but then override the figures on your K-1s.

Re: We have a two-member LLC where I am responsible for 100% losses. LLC made a loss but Turbotax is allocating the losses between both the members (on K-1)

Rick19744 — Tue, 10 Sep 2019 18:56:20 GMT

As noted by @Anonymous_ you need to make sure that the percentages are correct in the partner information section.

In addition, I certainly hope that you have retained tax advice in your allocation methodology and you have an operating agreement that supports this allocation.

Unless you have what the IRS regulations call "substantial economic effect" to support your allocation, if audited, the IRS will allocate based on a partner's interest in the partnership (known as PIP).

This is a very complicated area and understood by few, so as noted above, you need to have good tax advice on your allocation methodology.