Where to input the purchase of a business?

you don't on your 1040. you should be getting a k-1 from the partnership(?)  you don't buy stock in a partnership you but a partner's/member's interest. On the other hand, if the LLC was structured to be taxed as an S or C corporation, then you would be buying "stock" in the company though technically an LLC taxed as a corp never issues stock.

I received a K-1 from the partnership and input it into Turbotax. I also bought half the shares of the business (yes, the interest of the partner, but there was a specified number of shares in the operating agreement).

Not an S corp or C corp, it was an LLC.

Where do you input these details in Turbotax? I am paid on a K-1, and then part of my claimed income goes toward the note payment each month. How/where do you input this?  

Your purchase of the LLC interest should have been a third-party transaction between you and the member from whom you purchased your share of the LLC. If the seller agreed to installment payments, was there a formal agreement for this transaction? How do you pay the seller? From the payments you receive from the LLC? Did the payoff agreement include any interest on the balance? You may be able to deduct investment interest expense if you have documentation for the amount of interest you are paying on the purchase price of the LLC.

Schedule K-1 reports your allocated income from the LLC. In addition, if you are "paid" by the LLC, you either received Form W-2 (wages) or self-employment income (guaranteed payments) on Line 14 of the K-1. At this point, it appears Schedule K-1 is the only information you need to enter on your 1040 individual tax return.

Additional info:

• IRS Form 1065 Schedule K-1 Basis Rules
• IRS Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership
• IRS Pub 541 Partners Adjusted Basis

Let's expand on your issues:

• Since the LLC is a pass-through entity, make sure you start tracking your tax basis in this investment.  This starts with your purchase price and will be adjusted every year for the applicable items on your K-1.
• There is nothing else for TT to track related to the purchase.
• Each year you will enter the details from the applicable lines on the K-1 into TT.
• If you materially participate in the business, then as you go through the K-1 input questions, there should be a section on "not so common expenses" or something along those lines.
  • Once expanded there should be a place to enter the interest expense related to this purchase
  • This interest expense will then be reflected as a deduction on a separate line on your 1040 Schedule E titled "business interest".
• If you do not materially participate, then this interest expense is included in your other passive activity line items on the K-1.