Hi. I'm working on 1065 now with TurboTax Business. I entered end of year credit card balance and opening bank balance to the Liabilities and now balance sheet is in balance: Asset = Liability + Capital. But I get the message below in the Federal Review step. How can I reclassify or reallocate those? Thank you in advance for any advice.
Form 1065 p4-5: Rec liabilities-End: Other liabilities The program will not recourse debt to LLC members. Either reclassify the debt as nonrecourse or enter a special allocation code to indicate how the amount should be allocated.
You may enter the debt as non-recourse in the Balance Sheet section under Federal Taxes.
Or go to Forms Mode and open Sch K-1 Wks. On this worksheet, you can either change the classification to non-recourse or manually allocate the total recourse debt to each partner. Note that you will need to make these entries for each partner by scrolling within the worksheet.
Special allocation codes can be confusing and should be used only as a last resort.
How do you manually change or reclassify the account from recourse to non-recourse. I am using TurboTax Desktop version, it doesn't seem to allow me to delete the prepopulated amount from the previous year.
The numbers from the previous year are carried forward from your prior tax return. In order to change that number you would need to amend your prior years' return and adjust the number and then restart this years' return so that the data is carried forward.