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K-1 for deceased LLC Member Manager, Beginning, Ending and Intl/Fnl Percentages

Turbo Tax Business has confused me greatly with how to handle my situation. I have a Partnership LLC originally of five (5) members. In the same year, two (2) of those members transferred their memberships to two (2) other people (their adult children), one simply by choice and the other by choice at his death. No distributions were made in the early part of the year before these transfers occurred. Do I enter all nine (9) Partners and create "Final K-1's" for the two (2) Partners who "left" showing Distributions of $0 to them and Ownership Percentages of 0.000? -- or do I omit those two (2) and only create "Initial K-1's" for the four (4) new members, so seven (7) K-1's in total?

 

I cannot figure out how to make the ownership percentages accurate since TTB wants me to use the "Beginning" percentage as the "Intl/Fnl" percentage even when it is not the "Ending" percentage. This would show the resigning partners as having their original ownership percentages as their Final Percentages, while having the new members show ownership of those same "shares" as it were for their Initial Percentages.

 

Please, someone, walk me through how to fill out the Schedule K-1 Worksheet.

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1 Reply
PatriciaV
Employee Tax Expert

K-1 for deceased LLC Member Manager, Beginning, Ending and Intl/Fnl Percentages

The best way to tackle this is with a spreadsheet. Put Member's names across the top and dates down the first column. Enter the original ownership percentages as of the beginning of the year. This should not have changed since the last tax return.

 

For each change, enter the date and how the percentages changed. If the member "left", the percentage is zero. If they were added, give them the percentage transferred to them on that date. Every row must total to 100%.

 

At the end of the year, members with zero percentage on the last date should be marked as final.

 

TurboTax needs to know the transfer date(s) in order to allocate income properly. If you right-click on the *int/Fnl % box of any member on Schedule K-1 Worksheet, the On Demand Tax Guidance (Tax Help) provides this information:

"Initial or Final Profit, Loss, and Ownership Percentages 


This column is to collect certain profit, loss, and ownership percentages for partners that have been admitted or terminated during the tax year. 

 

The percentage for a newly admitted partner would be the percentage immediately after admission whereas the percentage for a terminated partner would be the percentage immediately before termination. 

 

These percentages will be used for reporting in Item J of Schedule K-1. 

 

Any partner with the Final K-1 box checked should enter the percentage immediately before termination, even if the partner was admitted to the partnership during the same tax year. 

 

If a partner has more than one profit/loss/ownership change during the year or was admitted and terminated in the same year, use the Additional Special Allocations and Weighted Average Worksheet."

 

This is a complex and tedious process, and you may consider upgrading to TurboTax Live Assisted Business. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.

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