Recourse Liabilities on K-1 of LLC

[averochka]

Recourse mortgage (guaranteed by LLC members) for some reason is flowing as Non-Recourse to K-1's and I can't figure out what was entered wrong.  How do I fix and show the debt on K-1 as Recourse.  Thank you.

[PatriciaV]

You can review Partner's Liabilities using Forms Mode. Open Form 1065 p5-6 and scroll down below the Balance Sheet to the Partners' Liabilities Smart Worksheet. Right-click on any amount in this worksheet and choose "About..." to see the On-Demand Tax Guidance for this section. Take special note of the Caution statement regarding LLC Recourse Liabilities.

If you need to specially allocate any of these amounts:

1. First, confirm that "Makes Special Allocations" is listed as Yes under Business Info >> About Your Business.
2. Go to Partner/Member Information and click Done at the bottom of the Member Summary page.
3. Continue to the page "How to Enter Special Allocations" and click "See Demo" at the bottom.
4. Follow the first example for Special Allocation by Amount to enter the specific liability amounts on the Schedule K-1 worksheet for each partner under Special Allocations By Amount Line A. (Skip the entry for Schedule K.)
5. Go to the Partners' Liabilities Smart Worksheet under Schedule L of Form 1065 p4-5.
6. Enter the SA code and the total Liabilities on Line D Recourse (beginning and ending columns).
7. If your beginning and ending liability amounts are different, set up two SA codes in step 4, the first for beginning and the second for ending amounts. Then enter the correct SA codes on the Smart Worksheet in Step 6.
8. To confirm the allocations, review Section K on each Schedule K-1.