You can enter these Schedule K-1 1065 income (loss) lines 1-12 by following these steps within the program:
- Federal Section
- Income -Select My Forms
- Less Common Income
- K-1 Earnings
- Schedule K-1 Form 1065
- Income
Please be aware you will need to enter the Entity Information for this Schedule K-1 prior to including this Income information. You can also reference these IRS Partnership Instructions for additional information.
Box 1 Ordinary Business Income (Loss): Report the amount as it is reported to you. Any loss should be reported as a negative amount in this and any other field stating income (loss).
Box 2 Net Rental Real Estate Income (Loss): Report the amount as it is reported to you.
Box 3 Other Net Rental Income: You should report the amount as it is reported to you.
Box 4a Guaranteed Payments for Services: You should report this amount as it is reported to you. It is generally considered active income or self-employment income and would not be considered as part of the Qualified Business Income reported by the entity in Box 20Z.
Box 4b Guaranteed Payments for Capital: You should report this amount as it is reported to you. A guaranteed capital payment is generally not self-employment income and would not be considered as part of the Qualified Business Income reported by the entity in Box 20Z
Box 4c Total Guaranteed Payments: There is no program entry for this line since it would be a redundant entry combining 4a and 4b.
Box 5 Interest Income: Report this amount as it is reported on your form. You should be aware that if your Schedule K-1 includes a statement designating this interest income as a part of a credit for holders of clean renewable energy bonds then you will have to use that amount to adjust your basis. When receiving this type of business credit your basis in the partnership has been increased by your share of this interest income from the credit, so you must reduce your basis in the total partnership by the same amount. See this Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership.
Box 6a Ordinary Dividends: Report the amount as it is reported to you. This will report on line 3b of the 1040 appropriately.
Box 6b Qualified Dividends: Report the amount as it is reported to you. This will report on line 3a of the 1040 appropriately.
Box 6c Dividends Equivalents: Amounts reported in Box 6c are not reported on the Form 1040 and will not be reported to any form. This informational amount is provided by the partnership as information to any partner that is not a U.S taxpayer or resident alien, and any amounts reported here may be treated as U.S source dividends.
Box 7 Royalties: Report the amount as it is reported to you so it can appropriately carry to the Schedule E.
Box 8 Net Short-Term Capital Gain (Loss): Report the amount as it is reported to you. This income will report appropriately on the Schedule D.
Box 9a Net Long-Term Capital Gain (Loss): Report the amount as it is reported to you. This income will report appropriately on the Schedule D.
Box 9b Collectibles (28%) Gain (Loss): Report the amount as it is reported to you. This income will report appropriately on the Schedule D.
Box 9c Unrecaptured section 1250 Gain: Report the amount as it is reported to you. This income will report appropriately on the Unrecaptured Section 1250 Gain Worksheet and Schedule D.
Box 10 Net Section 1231 Gain (Loss): Report the amount as it is reported to you in Box 10.
Check if the Section 1231 Gain (Loss) is Passive: Checking this box will effect how the gain or loss from Box 10 is reported.
Generally this income is passive it is from a rental activity or if you did not materially participate in the business activity or trade. If this is passive income please check this field. If you did materially participate do not check this box.
Please be aware that if the Publicly Traded Partnership (PTP) box is checked on Line D of Part I of the Schedule K-1 (should be already noted in the Entity section of this Schedule K-1 entry), a net passive loss from a publicly traded partnership will not be deducted from other passive income on the 1040 and this amount will not carry to Form 4797 or Form 8582. Instead, this passive loss from a publicly traded partnership is suspended and has to be carried forward to be applied against passive income from the same publicly traded partnership with in the Entity Information section in future years.
Box 11 has several codes reported with some not directly reported with in the Schedule K-1 entry.
Please review this article for details on Box 11 Schedule K-1 1065.
Box 12 Section 179 Deduction: The IRS does limit Section 179 deductions and the program does not calculate these limitations. You should only enter the amount of section 179 expenses for this partnership that are with in the limitation amount.
To determine the amount to be entered in this field, Form 4562 must be completed. Specifically, the amounts reported in Box 12 are used, along with the total cost of section 179 property placed in service during the year from other sources, to complete Part I of Form 4562. You can use this IRS Form 4562 and instructions to determine this limited Section 179 amount.
The Section 179 Deduction that is allowed can affect the Qualified Business Income (Section 199A income) and the amount reported by the partnership as Qualified Business Income (Loss) on Box 20, Code Z may need to be adjusted to reflect any allowed Section 179 Deduction.