TT software K1 error

[OldCarGuy]

I cant find a way to discuss this software error with a person

[AmeliesUncle · Accepted solution]

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@OldCarGuy wrote:

and it shows up on K1 line 14 A but 14C shows a gain = 1/3 of our revenue 

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That is correct.

Code "A" means your profit that you NEED to pay self-employment tax for a profit.

Code "C" is an optional way if you CHOOSE to pay self-employment tax for certain reasons.

[M-MTax · Accepted solution]

1-800-446-8848

....and it's possible this is an input error.

[M-MTax]

@AmeliesUncle 

The stated claim here is that @OldCarGuy's LLC is showing a net loss on the 1065 but the K-1s are showing a positive figure subject to self-employment tax.

[AmeliesUncle]

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@M-MTax wrote:

@AmeliesUncle 

The stated claim here is that @OldCarGuy's LLC is showing a net loss on the 1065 but the K-1s are showing a positive figure subject to self-employment tax.

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No, he said Box 14A is a negative number, which is correct.

Box 14C will always be a positive number because it is based on gross income, not profit.  It is for the optional way to calculate SE tax.

[M-MTax]

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@AmeliesUncle wrote:

Box 14C will always be a positive number because it is based on gross income...

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OK, I missed the part where he wrote that entirely. I read the one post as saying that both Line 14 figures were negative.

[OldCarGuy]

do i need to include this number on my K1s 

if yes, must the partners include in their personal returns 

[AmeliesUncle · Accepted solution]

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@OldCarGuy wrote:

do i need to include this number on my K1s 

if yes, must the partners include in their personal returns 

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Yes and yes.

But unless the partners on their personal returns make the CHOICE to use the optional method of calculating SE tax, Box 14C will have no effect on anything.

[OldCarGuy]

i believe i have uncovered the "error" -- still on hold to explain it to the TT expert

I've gone over my past returns -- all of them calculate the alternate SE and show it in schedule K page 5 line 14c

---if the LLC earning are positive -- the system includes the non-farm earning on K1 line 14C

BUT if the earning are negitive it does not list anything in Box 14 of the K1 -- which is correct

SO there is an error in the 2025 program -- a change from all prior years

since i can't get anyone to talk to me I hope those of you at level 15 can get this message to teck support or to whom ever needs to know 

thanks 

[AmeliesUncle]

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@OldCarGuy wrote:

BUT if the earning are negitive it does not list anything in Box 14 of the K1 -- which is correct

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No, that is not correct.  A loss (negative earnings) should still have the numbers in Box 14 because code "C" allows the optional method of SE tax.

IF prior years were not doing that, then the prior years had an error and this year has been corrected.

[Mike9241]

from 1065 k-1 imstructions line 14

Code A. Net earnings (loss) from self-employment. If you're a general partner, reduce this amount before entering it on Schedule SE (Form 1040) by any section 179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties. Don't reduce net earnings from self-employment by any separately stated deduction for health insurance expenses.
If the amount on this line is a loss, enter only the deductible amount on Schedule SE (Form 1040).

so this line can be negative. 

14 (c) is gross nonfarm income that will be different from the net loss. 

If the activity is passive  rental real estate,14A and C should be blank because it is not self-employment income