Family Cabin LLC (form 1065 of K-1)

[nomorebruce]

This is my first year with Turbo Tax.  I don't know how to answer when Turbo Tax asks me to:

Describe the Partnership:

Check any that apply:

 I am required to pay supplemental business expenses on behalf of this LLC for which I am not reimbursed.

I have passive activity losses carried over from last year. Learn More

All of my investment in this activity is at risk. Learn More

I have at-risk losses carrying over from 2021.

I personally paid health insurance and/or long-term care insurance premiums for myself and my family.

Well, I know it is not the first or the last but I have no idea which of the others it might be.  I will say that the LLC get a "Partner's Basis Worksheet" every year if that helps.  (Obviously it doesn't help me.)

I appreciate any help!  Thanks!

[JosephS1]

The questions you ask are ones which most people new to Form K-1 ask.  I will try to give you the best answer I can with the limited information available to me in the order in which you ask.  I will show screenshots per question if it is available.

Describe the Partnership:

In most cases this would be checked "None of these apply".  If it is a new private LLC it would not be publicly traded, nor would it be foreign or any other item in the normal course.  There are instances where you may have received an amended K-1 (the original was incorrect) but this is rare.  Normally this is "None of these apply".

You did not ask about type of activity, most are Box 1 or Box 2, nor about material participation, which if you are one of those that participate in decisions would be yes.

The next screen for entering income or loss is taken directly from the K-1.  If there are other boxes on the K-1 with data in them you will check on the next screen what boxes those are.  If nothing else shows you would just click continue.

Now we come to "Describe the Partnership" which you did ask about.

The first box asks if you are REQUIRED to pay business expenses on behalf of the partnership for which you are NOT reimbursed.  Normally this box is left blank unless the partnership agreement requires you to pay certain expenses on behalf of the partnership.

As this appears to be the first year of the partnership you would leave the next box blank as there would not be any carryover from a prior year.

The next box is normally checked as if the partnership went into bankruptcy or disbanded somehow you would lose your investment.

The next box is blank as this is a new partnership.

The next box is for a partnership that the income for which is subject to self-employment tax and for which you can receive a self-employed health insurance deduction for it.  If this is the case check this box; if not leave blank.

@nomorebruce 

[nomorebruce]

Joseph,  Thanks for your time!  So this is not a new partnership.  But doing the taxes for it are.  I receive the K-1 form from the partnership which I used to give to my tax guy.  But this year I am doing it.  I struggled with filling in the boxes from the K-1 1065 a bit.  I wasn't sure when there was a code, for example "W" in box 13 and all it said was "STMT".  But I found in prior questions on TT that I go to the statement page (in this case the statement page read for code W were 3 items:  Property taxes, investment fees and tax preparation fees.)  I added those amounts up and put in box 13 on TT.

But I was totally confused by "Describe the Partnership".  I'd like to say its just an old cabin that my siblings and I have  have since my mother died that bring us joy from our childhood.  But that wasn't one of the answers.  From what you wrote it isn't the first, it might be the 2nd or it might be the 4th. 

As I stated in the original question there is a "Basis Worksheet" included with my K-1.  Does that help with choosing which is the correct answer to "Describe the Partnership"?

Again, thank you so much for your time.

[nomorebruce]

OR maybe I don't need to check ANY of the boxes?  But it doesn't give me the option of "none".

[AliciaP1]

If you have losses from a prior year you will need to mark the appropriate box to describe the partnership.  You should have a carryover worksheet included in your 2021 return that will show any amounts to be carried over.  If you do not have that worksheet or a statement with specifically identified carryovers, you can choose None of these apply (I can't find a version of TurboTax that does not include "none" as an option at the bottom of this list).

Your basis worksheet is the value of your share of the partnership.  It is important if you are reporting a loss (you have to have enough basis to support the loss) or if you sell your partnership interest.

If you walk all the way through the Schedule K-1 entry interview in TurboTax with the information on your K-1 and maybe from your last year's tax return, you should be successful.

@nomorebruce