This is a subtle extension to a bug we reported last year that was preventing filing and was fixed. Afterward, we found this new (probable) bug and filed with incorrect numbers in this one place - due to exhaustion. We don't think Maryland actually uses this information from this form, but we would like it to be correct. We will probably have to file incorrect numbers again this year, but hope this will be fixed for next year.
On 510 Schedule B "Individual Member's Information" the column that says "distributive or pro rata share of income" should match line 1 of each member's Maryland K-1. But this year and last year it does not match for us. In the prior bug, K-1s and other aspects were affected with seemingly the same underlying cause, but those other issues were corrected. Focusing on this year and Maryland alone, we are confident that the Maryland forms K-1 are computed correctly for us. We believe that the numbers on schedule B should be (at least in our case) simply copied from line 1 of the member K-1 forms.
The problem for us seems to arise because one member has a "guaranteed payment" amount (same cause as last year's bug). Maryland combines the federal distributive share of income and individual guaranteed payments into the 'distributive share' on line 1 of the Maryland K-1, assigning a new effective pro rata share for such member that reflects the portion that they received of the total so derived for the whole LLC . That total appears on form 510 line 2, which combines the total distributive income for federal purposes and the guaranteed payments made to individual members. The problem is that for 510 schedule B, it appears that TurboTax is taking this line 2 and multiplying it by the original percentage interests (pro rata shares) provided for federal purposes. Therefore, the number will be low for anyone with a guaranteed payment and high for everyone else. Again, we believe the numbers on schedule B should match the K-1s, which now are reporting the correct amounts by adding individual distributive income shares (federal definition) and individual guaranteed payments (in effect treated as additional distributive income in Maryland).
To see this bug, simply create a return in which there are several members in an LLC and one has a guaranteed payment amount. One other thing unique about our situation is that the one member with a guaranteed payment is also the only non-resident, but probably this will not have an impact. Similarly it is possible that we should specify that the guaranteed payment appears on federal K-1 line 4a (for services). Again, for 2022 we are now confident that every aspect is correct for our federal and Maryland returns and K-1s of the LLC, except this Maryland 510 schedule B in the sited column alone.
