K-1 (1065) with amounts in both box 1 and 2.

I received a K-1 (1065) from a publicly traded limited partnership.  Since it has entries in both box 1 (ordinary business income) and box 2 (net rental real estate income) TT is telling me I need to enter 2 K-1s and allocate the numbers in boxes 4 through 20 to each type of activity.  I called the partnership and asked for the additional information and they said they do not provide that information because it is not required by the IRS.  Since both the business and rental income were passive I should only have to enter one K-1.  How do I work around TT wanting to split this into two K-1s?

    Just put the box 2 rental real estate amount on a separate K-1.
    • So you have to enter all that information just because there is a number in box 2 (very small...$3)?
    • I have the same problem. In fact out of four K-1s I receive, three of them have entries on both line 1 and either line 2 or line 3. I tried going to forms view and putting in the missing number, but then both of the two lines entered showed as errors.
    • Has anyone determined how to solve this?  If you create a second K-1 do you re-enter all the same info on part I and part II of the K-1?  Doesnt that cause double reporting?
    • I put everything except the number in box 2 on the K-1 then I added a second K-1 with nothing but the number in box 2.  Forcing you to make a second when all the income is of the same type (i.e. passive) is a significant limitation in TT, but the workaround seems to work.  I recommend anyone with this issue provide feedback to TT so they might fix this.
    • Ditto.  Turbo tax is not clear and I broke it out as if I had two K1's and put the box 1 income and every other number on one K1 and then only box 2 income on a second.  Then when reviewing errors at the end the numbers don't add up correctly and it wants me to revisit this section!
    • I am re looking at how Turbo Tax is handling this and there are serious issues.  If one of the two boxes is a loss Turbo Tax will have you paying more tax than you should.  Also, if there are at risk issues, such as nonrecourse loans in part II k, Turbo Tax will again show more tax than is correct.  Entering as two K-1s is a marginal workaround to a Turbo Tax limitation that could result in significant errors.
    • Then should you simply duplicate all the box 4-20 numbers to solve the bug in turbo tax ?
    • I definitely wouldn't put the numbers in twice.  I ended up putting everything on the box 2 K-1 and having box 1 on a K-1 by itself.  Another issue is what is going to happen when the IRS tries to match up the K-1 they received from the partnership with my return.  I am expecting a letter from them.
    • Has anyone considered allocating the remaining amounts in blocks 4 through 20 as a percentage of each entry in the
      K-1? I would do this by adding the amounts in line 1 and 2 and then dividing the amounts in line 1 or 2 by this total, and applying the respective percentages to the subsequent entries on my original K-1, when completing the 2 reports that Turbo Tax is forcing us to complete.
    • So is the solution of adding a second K-1 for Box 2 amount a work around for TT?
    • This response is in reference to skidragon.  Two issues:

      First, this is not a limitation of TT.  This methodology is used by a number of other software providers.  This is due to the fact that box 1 could be active and box 2 is by default passive.

      Others who read this should follow my original response (and not skidragon's method).  Put everything (all box items except box 2) on the first k-1 and then only box 2 on the second k-1.  This is due to the fact that all the other boxes will relate to the box 1 activity.
    • This absolutely is a limitation of TurboTax!  Just because other products handle this poorly isn't an excuse for TT to do the same.  Since TT is not clear on what to put where means one could end up paying extra tax due to the TT limitation.  This is contrary to TT's claims of accurately calculating the lowest possible tax.  
      The way TT should handle this is have you put in the numbers on a single exactly as you receive it from the company.  As a minimum there should be clear instructions on what to put where and why.
    • I agree that this is a TT limitation.  But also an MLP data limitation.

      Mostly we end up doing what Rick and most others are saying - just do second (and sometimes third - additional K1 for the same MLP.
      That is a leap of faith that the numbers in the non income boxes are all pertaining 100% to box 1 income which is very unlikely.How could the capital gains/losses and other items be attributed 100 % to only one source of the MLP's business.

      I think Heavy was close with pro rating other boxes based on percentage of income but again that is a leap of faith that the percentages are equal which is unlikely.

      TT is saying that these different income types have different tax implcations.  That is why it doesn't let you enter it on the same form.  If they were going to treat it differently and all data only applied to box 1 income they'd let you enter boxes 2 and 3 income on the same form.

      Perhaps they should allow an automatted allocation using Heavy's approach or allow skidragon et. al.'s approach but allow it on a single K1.

      e.g. either allocate all boxes based on income percentages

      or allow single entry with all box 4-20 items pertaining to box 1 only.

      Until the MLP's issue K1's for each type of income we have no other means.

      Have fun doing your taxes - see you on this same issue next year.
    • I think the best thing to do (as has been suggested year after year) is enter the first k1 with all boxes other than the income in box 2 or 3 followed by separate k1 s with box 2 or 3 entries only.  All information is accounted for the entries map to the forms as intended .  Without additional data from the MLP there is no better way to handle this and TT doesn't allow the entry as supplied by the MLP.
    For a K-1 with entries in Boxes 1 and 2 last year,  I called the partnership's tax dept.  You enter two separate K-1s:  "Partnership Name" with all entries except Box 2.  Enter second K-1 as "Partnership Name (Box 2)" and Box 2 entry only.  

    Some day in future  if you sell "ALL" your partnership units,  check Final k-1 (ie, partnership ended) and enter zero for both: proceeds and cost basis, for the second K-1 (Box 2).
      Heavy - I think you are close to the correct way to do this but still wrong.  The allocation you describe assumes the ratio of income applies to all other entries..  In the course of the MMLP business however this won't be the case.   The rental income may have a higher or lower share of any of those numbers (or no value at all).

      I am convinced at this point that the IRS should either not segrate the treatment of income for the MMLP's or they should require separate K1's from the MMLP - and therefore set of books for the k1 - to account separately for all revenue and costs and then issue 2 K ones.

      Putting the rental income only on a separate K1 - Skidragon et. al's. approach represents that the rental business produces only income - no cost - so that isn't right.

      Heavy's approach represents that the two business segments have the exact same costs, revenue categories ect. so that isn't right.

      Duplicating boxes 4-20 represents doubled values in the aggregate so that isn't right either.
      • I agree making 2 K-1s in Turbo Tax is a marginal workaround at best.  However, I couldn't find any better workarounds.  Ideally Congress would simplify the tax code (I have written my Senators and Representative) and the IRS would simplify its rules and forms, but I doubt either will happen.  The best we can hope for is Turbo Tax to fix their software to match the current rules.
      • My real life example - my PTP is Stonemor Partners, 100 Units, Box 1=$38, Box 2=$10
        So like everyone, I'm confused.
        a) I first noted what the impact was when I did Just Box 1 and all the other boxes.
        b) Deleted that, and did the same for Box 2,
        c) Then I combined Box 1 & 2 together as if there were one entity ($48).
        d) Then I redid each Box (1 and 2) separately with all the other Boxes included to see the net effect on my refund.

        The difference between c) and d) was just $1 for the State.

        If you look at the Sched E that is created, the (2) PTP's are listed and the (2) Interests are listed and then combined for a Total of $48. That's ok.

        NOW, BOX 5 shows up twice in Sched B, so you can't Enter that amount twice!

        AND, BOX 20A shows up twice inside the Detail of Line 4a of FORM 4952.

        Appears you can't enter anything twice without messing up tons of other forms.

        I'm going with (2) separate K-1's, #1 with ALL Data for just Box 1 AND #2 with ONLY Box 2 and all others left blank. This worked and reported no Errors upon review and resulted in the same net Refund amount.
      • I have K-1's with both box 1 ordinary and box 2 rental entries.  Fortunately the box 1 through 20 information is neatly divided between the different activities in the supporting pages.  My question is what do I do with the Part II, section L information, i.e. beginning capital amount, etc.  This is not divided between the different activities.  


      • Is there any further news on the correct way to handle this?  This thread seems to be a year old.  I have the Box1+Box2 issue this year and TT is still recommending a 2nd K-1 with no instructions on handling subsequent box amounts.  Also, perhaps unrelated, whatever I do seems to result in ZERO in the income summary once I return to that page of TT.  :-/
      • I'm convinced and still place all information except Box 2 on the first interview. Then add second interview with ALL information in Parts I and II, then in Part III, only Box 2, nothing else! Works fine and makes sense as you're only reporting the different type of Income of Box 2. All adjustments made in the remaining boxes made no discernible difference if split between two by some ratio or if everything was combined into one. The only difference is the Income. As you've noticed, the net effect on taxes is ZERO or near ZERO. I have quite a few of these and only one has the double income, BUT, usually there is no NET adjustment to my Federal Refund, some of them increase the amount I get. Some of them reduce only my State refund. I have over 10k invested in these things and the impact on my taxes is negligible.
      • Thanks for the clear and logical advice... very helpful.
      • I think my post of last year is correct.  We are not receiving the information from the MMLP to allocate to the types of income .  income is separated but costs (other boxes) are not.
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