Partnership Tax Return

[WisKim]

I am preparing a partnership income tax return. There are two partners in this partnership. The partnership received three K-1's, two of which have K-3's attached. 

I have indicated on line 16 of the K-1's recieved that there is a K-3 and it simply tells me to enter the info in the correct places on the income tax return. 

I have also indicated on line 16 of the individual partners K-1 that there is a K-3. However, I can only get one K-3 for each partner. Do I combine both of the K-3 information I received into the K-3 generated for each

partner? When I do that (which I am not sure is correct), I cannot get the K-3 to print with the return nor can I get it in the final product for the return that is to be submitted to the IRS.

What am I doing wrong? I have spent hours on this. I am beginning to think that Turbotax is not equipped to handle a partnership return when that partnership has received two K-1's with K-3 info?

Of note is the fact that Under Part II Foreign Tax Credit Limitation, Section 1, Line 6, there is US interest income reported on each of the K-3's. One partnership reports $1 and the other $2299.

Thanks!

[PatriciaV]

Yes, each partner should receive one Schedule K-1 and one Schedule K-3. The K-3 information received from the partnership investments should be combined on the partner K-3.

What type of error do you see when you complete the K-3 entries? Have you looked at these forms in Forms Mode? It's possible you manually entered an override, which will cause a form error.

After you click the Forms icon in the TurboTax header, review the list of forms on the left. Any forms with red exclamation marks have errors. Click the Errors icon at the top of the forms list to open a box under the open form that displays the error(s) for that form. Entries that need to be corrected appear in a red font or a red box. Make entries only in yellow boxes or where the font is blue or green.

See also: What's the meaning of all the different colors in Forms Mode?

For US-sourced income reported on Schedule K-3, you can choose "Various" from the country drop-down.

[WisKim]

I have manually prepared a K-3 for each partner (checked box by line 16) with the combined K-3 information from the sub-partnership. Yes, I did this in forms mode. There are no errors in the return nor are there any overrides. My turbotax for windows is up to date.

My issue is that when I print the return, the K-3's do not show up. The K-3's also do not show up when I do File-print "all official forms required for filing".  So, I think they will also not show up for the IRS when I e-file the return. I do not want to open myself up for a possible penalty by not correctly filing the K-3's.

I have researched whether I can request a waiver from being required to efile the return. This will not work as a software glitch is specifically excluded from the reasons for which a waiver will be granted. 

I really do not want to go to a local CPA firm and have the returned filed. I am sure that would cost me $1,000 for them to review and reenter everything using their own software. 

Any thoughts on how to make this work within Turbotax?  Thank you so much.

[DaveF1006]

The K-3 is an informational form that is not filed with the IRS on the entity level. Instead it is issued to the partner for them to report on their tax return on the individual level when they report their K-1 activity. 

You can safely efile your return without having the K-3's because these are not official forms to be filed with the IRS. If you prepared the k-3 forms and wish to print them or download them in a PDF to get sent to the partner, then the form will appear in your print menu as a separate entry.  i have included a screenshot illustrating this.  just remember, the k-3 doesn't get filed with the IRS.

[WisKim]

Starting in tax year 2022, Schedule K-2 and K-3 are e-filed with the return. 

[WisKim]

From the IRS instructions for form 1065:

 

When and Where To File

Attach Schedules K-2 and K-3 to the partnership’s Form 1065 and file both by the due date (including extensions) for that return.