K-1 Box 17 Code V* STMT Multiple Businesses

[Anonymous]

It's my first time filing a Schedule K-1 where Box 17 has a code V* with STMT entry.  I left it blank in TurboTax and made it to the additional information where I had no troubles entering all of the Statement A - QBI Pass-through Entity information.  However, the Statement A contains a second company with Ordinary business income.  As there isn't any place which it appears I can enter this other business, is it correct that I need to create a second K-1 in TurboTax to support getting this single value entered? 

If it's correct that TurboTax needs additional K-1's entered for any additional businesses on Statement A, would the process be to create the extra K-1, enter the main company information (who generated the K-1), and basically just progress to the screen asking which boxes have an amount and check box 17, enter code V, choose that the income comes from another business, and then enter the other business info and 199A income?  It just seems strange to have to do this in a whole other entry.  It would be nice to get some confirmation that I'm doing this right.  Any help/advice would be greatly appreciated.  Thanks!

[DavidS127 · Accepted solution]

Yes, you described correctly how to enter the second K-1 for the passthrough entity Section 199A ordinary income being reported on the K-1 from the main S Corp.

[QPC]

I have the exact same concern. Even though I understand I need to create a new K-1, what should I fill for Box 1-16, BEFORE I can get to the step to report the second entity as a result of setting V in Box 17? For example, if the Box 1 of my main K-1 is $100, shall I put $100 in Box 1 for BOTH K-1s created? Thanks! 

[JamesG1]

I don't think so.

If box 1 of the main K-1 is $100, that $100 will follow through and eventually be taxable income on your tax return whether or not you qualify for a qualified business income deduction.

If you enter $100 in box 1 of the second K-1, I believe that you will overstate your taxable income.  This should be easy to test out on your tax return even before you enter the qualified business income deduction information for each K-1.

Are you able to report $50-$50 or $70-$30 in box 1 of the two K-1's based upon the information reported in the Schedule A STMT?

In addition, if you were to report net income at the screen Enter Income or Loss from Box 1, then I would expect to see: 

• V-Section 199A information and the income amount at the screen Enter Box 17 Info, and
• At the screen We need some information about your 199A income:

1. Ordinary business income,
2. W-2 wages for this business, and
3. UBIA of qualified property for this business.

[QPC]

Thanks @JamesG1 Yes, I can manually split the amount, e.g. $130 and $-30, so that the total of both K-1s in Turbox Tax will add up and equate the original K-1 I received ($100 = $130 - $30). But is this the correct way to enter the K-1 data to Turbo Tax in this situation when I have 2 entities in Statement A? 

[AmyC]

Yes. The program sometimes needs a second K-1 entered for those situations. James is correct about the V and QBI needing to match up. The IRS gets the tax forms, not all the behind the scenes programming.

@QPC

[QPC]

Just to confirm and summarize my understanding for this situation:

- Company X sends me a K-1 with $100 in Box 1

- Statement A shows Company XYZ income of $130 and Company ABC lose of $30

In TurboxTax, I need to create two K-1

1. Use Company XYZ information and put $100 in Box 1 
2. Still use Company XYZ information and put -$30 in Box 1

Is this correct @AmyC ?

[DaveF1006]

No, you will report $100 in Box 1 for this company on one K-1. The statements are information only showing you details of the $100 amount.

[Edited 03-09-2021|6:57 PM PST]

[QPC]

I am a bit confused. From what I understand from @AmyC reply, I need to create two K-1 in Turbox Tax to accommodate the 2 companies in Statement A. If that's the case, and I put $100 to Box 1 in both K-1 suggested by @DaveF1006 , the total will be $200, which is different than the amount I received of the only one K-1 I received. So, can someone clarify this for me please?

[DaveF1006]

No. You will not create two K-1's, create 1 and report the $100 total.  You report the K-1 by the partnership or S-Corp that issued it AND not the two individual companies listed in the statement

[QPC]

Thanks @DaveF1006 but if I have only one K-1, how can I report the 2 companies listed in the Statement A in Turbo Tax?

[DaveF1006]

You don't need to issue separate K-1's for those companies. They did not pay you. They paid the entity that issued the K-1 who in turn distributed your share of the payment to you. The information on the statement is information and does not have a reporting requirement. 

[QPC]

@DaveF1006 I understand that i need only one K-1. However, for Section D1(Statement A), it says

"IMPORTANT: If the statement reports information from more than one trade or business, please enter activity on a separate K-1 entry worksheet."

How can I add the worksheet in TurboTax to report the other company listed in the Statement A I got for my K-1?

Thanks!

[JamesG1]

I think that you are saying that you are entering a single K-1 form from a 1120S that has more than one activity listed in boxes 1, 2 and 3?  Please clarify.

In TurboTax Online, at the screen Choose Type of Activity, instructions say:

To determine what type of activity your S corporation was involved in, look at boxes 1 through 3 of your Schedule K-1. An amount on:

 - Box 1 indicates business activity
 - Box 2 indicates real estate rental activity
 - Box 3 indicates other rental activity.
 - Other indicates a single activity other than a rental or business activity. This might include something like an investment club.

If your K-1 does not have an amount on these boxes, select Other.

Note: If your K-1 shows more than one type of activity, treat each one separately. Enter all business items on one K-1, all real estate rental items on another K-1, and all other rental items on a third K-1.

[QPC]

Hello @JamesG1 , what i meant is in my K-1 only, one number in Box 1. However, this number is because of 2 entities: (1) the company issues me this K-1 (2) another pass-through LLC. Therefore in Statement A (NOT K-1), there are 2 entities. I don't know how to report the multiple values in Statement A by Turbo Tax. Thanks!