1065 K-1 needlessly complicated?

[avjunior]

First it's been mentioned before that TT won't allow one to enter Box 1 and Box 2 amounts on the same K-1.  This makes things confusing because one doesn't know on which K-1 to enter other boxes present.  TT explains that ordinary income and rental income have to be separated.  However H&R lets you enter both amounts on the same K-1.

But there is also confusion with entering passive carryovers.  The screen TT presents to do this has a "Box 1 - Ordinary Income" and a "Box 2a - Ordinary Income".  In my case the carryovers are from rental income losses and neither seems pertinent.   And what's the difference between the two boxes since they are both labelled "Ordinary Income"?  Box 1 and Box 2a don't appear to be on any IRS forms.

[Anonymous]

for a k-1 with amounts on boxes 1 and 2 everything can be entered on the first k-1 except box 2 and any other info provided in a supplement that says it relates to box 2.  there is a reason for this - they're separate activities and should the partnership dispose of 1 any suspended losses would be allowed for that activity but not the other. if present 199A/QBI info needs to be separately reported.   you'd be surprised but on certain k-1's, the amount on line 1 can come from multiple activities that the IRS says needs to be separately reported. I've seen cases where 4 k-1's must be used to report line 1 activity.

just because H&R allows reporting on one k-1 does not mean that your return is correct.

[avjunior]

However partnerships don't issue multiple K-1's- they issue only one with additional sheets with explanations for the codes.  I'm still not clear why TT can't parse the single K-1 presented by the partnership?

Also any help with the passive carryover screen is much appreciated!

[avjunior]

I found that H&R is much clearer in entering passive carryovers- they present a screen to enter carryovers in each category- box 1, box 2 and box 3.  They can do this because they don't require splitting K-1's.

[Anonymous · Accepted solution]

do they! each line represents a different activity (maybe even multiple activities of the same type).  you probably end up with just one number for the PAL. should the partnership disposed of an activity the PAL related only to that activity would be released and become deductible.  however, since you have just one number as the PAL c/o, there is no way to know how much you can deduct unless you go through each year's k-1.  so you'll need to keep all your k-1's possibly for decades.   

[Anonymous]

since you say H&R keeps track of the PAL c/o's and 199A info for each activity and is easier for you to use then go with it.  I did try H&R when I first started preparing my returns and I though it harder to use and understand. to each his own.