How to report: LLCs receiving K1's

[HiltonL]

I have done 1065s for LLCs and partnerships before.
But I haven't done a 1065 for an LLC that in turn owns partnerships.

LLC is a 'family partnership'
owned partnerships are Rental Real Estate and a stock investment (symbol: UNG)

Can you advise, or provide pointers on where I should look for guidance, so that I can get this reported correctly?

thanks in advance!

[BOB W]

I have done 1065s for LLCs and partnerships before.
But I haven't done a 1065 for an LLC that in turn owns partnerships.

LLC is a 'family partnership'
owned partnerships are Rental Real Estate and a stock investment (symbol: UNG)

Can you advise, or provide pointers on where I should look for guidance, so that I can get this reported correctly?

thanks in advance!

Your tax program should have a "Foreign or Partnership" K-1 input screen for reporting an ownership in an other entity that give them a K-1 in their name. Check it out.

[DTS]

Can you advise, or provide pointers on where I should look for guidance, so that I can get this reported correctly?

If you look in Tab 4 of TMI's Small Business Edition, there are very good examples and, most likely, the info you are looking for.

D

[HiltonL]

If you look in Tab 4 of TMI's Small Business Edition, there are very good examples and, most likely, the info you are looking for.

I have the Deluxe Edition, what does Tab 4 of the SBE map to in the DE?
I looked through Tab 20, Partnerships and LLCs to no avail.

[taxea]

How about the IRS pub for LLC's or 1065 instructions. taxea

[HiltonL]

Taxea,

Are you referring to i1065.pdf line 4 (Ordinary income...partnerships) or line 7 (other income)?

Line 4 doesn't seem right because passthrough entities should retain the character of the income, right? Thus converting RRE income (loss) into Ordinary income (loss) doesn't seem kosher.

Line 7 could be, but again there is no clarity regarding the character of the income.

Any more specific ideas?

--Hilton

[BHoffman]

Taxea,

Are you referring to i1065.pdf line 4 (Ordinary income...partnerships) or line 7 (other income)?

Line 4 doesn't seem right because passthrough entities should retain the character of the income, right? Thus converting RRE income (loss) into Ordinary income (loss) doesn't seem kosher.

Line 7 could be, but again there is no clarity regarding the character of the income.

Any more specific ideas?

--Hilton

Hilton - welcome to the forum

Are you preparing the return that reports the RRE activity? If so, are you reporting the RRE activity on form 8825?

[newbie]

How about the IRS pub for LLC's or 1065 instructions. taxea

Advise like this is what makes this board so valuable!

[BHoffman]

Advise like this is what makes this board so valuable!

It's like spam, but it does increase the post number. We're batting for a 1000 before the end of this season

[BOB W]

Your tax program should have a "Foreign or Partnership" K-1 input screen for reporting an ownership in an other entity that give them a K-1 in their name. Check it out.

Am I missing your question or are you missing my answer???????

My program has a "Passthrough entity worksheet" where I input the K-1 info from another entity in which it owns. Seems straight forward to me.

[BHoffman]

BobW - I'm reading Hilton's question differently. I'm reading that he/she has prepared the 1065 that reports the results of RRE activity and issues the K1s to the other entities, and Hilton prepares those returns as well. Now, Hilton is looking at the K1s from LLC#1 and is wondering why the rental activities are showing up as ordinary income. So it looks like Hilton thinks the K1s are wrong, so entering them isn't an option.

Since there seems to be some problem with the way the K1s are coming out, I'm wondering if he/she intended that the rental income show up on the K1 in box 2 as rental income, but finds it showing up in box 1 as ordinary income. That indicates to me that the RRE activities have probably been entered on Pg. 1 instead of form 8825.

At least, that is what Magic 8 Ball said Perhaps Hilton will post again and let us know if that helps or not. Hope so.

[HiltonL]

Thanks all for the warm welcome!

So, to explain, hopefully more clearly.
I am only preparing the 1065 for a 'family partnership' LLC.
The LLC owns pieces of other 1065 partnerships, which are RRE and PTP.
The owned (RRE) partnership 1065s are prepared elsewhere. I only have the already-prepared K-1's.
One RRE is >20%, so I have entered the background information in the LLC's 1065 SchB line4b.
One K-1 comes from a stock investment the LLC owns symbol:UNG (publicly traded partnership). This K-1 has line11c Other Income (Loss) on it. It also has line1 Ordinary Income (Loss), which obviously goes on the LLC 1065 line4.

My question is that in preparing the 1065 for the LLC, where do I put the entries from the owned partnerships, so that the character of the income is maintained.
Seems it would be easier for me if there were a 1065 form analogous to 1040 schE!

Maybe I'm wrong and the character of the income does not have to be maintained, but that goes against my instincts.
Thanks for all the replies everyone, hopefully that means that this topic is interesting and not your everyday tax question

[BOB W]

My question is that in preparing the 1065 for the LLC, where do I put the entries from the owned partnerships, so that the character of the income is maintained.
Seems it would be easier for me if there were a 1065 form analogous to 1040 schE!
************************************************** *************************************************

Again, that is what my program allows, a K-1 input screen on the parent 1065. Just like Schedule E 1040. Yes the character of each sub K-1 must be maintained and passed thru.

[BHoffman]

Thanks all for the warm welcome!

So, to explain, hopefully more clearly.
I am only preparing the 1065 for a 'family partnership' LLC.
The LLC owns pieces of other 1065 partnerships, which are RRE and PTP.
The owned (RRE) partnership 1065s are prepared elsewhere. I only have the already-prepared K-1's.
One RRE is >20%, so I have entered the background information in the LLC's 1065 SchB line4b.
One K-1 comes from a stock investment the LLC owns symbol:UNG (publicly traded partnership). This K-1 has line11c Other Income (Loss) on it. It also has line1 Ordinary Income (Loss), which obviously goes on the LLC 1065 line4.

My question is that in preparing the 1065 for the LLC, where do I put the entries from the owned partnerships, so that the character of the income is maintained.
Seems it would be easier for me if there were a 1065 form analogous to 1040 schE!

Maybe I'm wrong and the character of the income does not have to be maintained, but that goes against my instincts.
Thanks for all the replies everyone, hopefully that means that this topic is interesting and not your everyday tax question

Well, I think the way I perceived your question made it a lot more interesting

I agree with BobW if this is nothing more than data entry. Just enter it as it appears on the K1.

[HiltonL]

OK, time for an admission

My question is that in preparing the 1065 for the LLC, where do I put the entries from the owned partnerships, so that the character of the income is maintained.
Seems it would be easier for me if there were a 1065 form analogous to 1040 schE!
************************************************** *************************************************

Again, that is what my program allows, a K-1 input screen on the parent 1065. Just like Schedule E 1040. Yes the character of each sub K-1 must be maintained and passed thru.

I do not have corp-grade software to help me through this. I am a tax-savvy individual (ex-6 years Block) who is preparing the LLC 1065 manually.
My personal-grade software (TaxCut) does not handle this situation to the best of my knowledge. None of the personal-grade (TurboTax, TaxAct, TaxCut) prepares standalone 1065s. Or do they?

Computers are great, but knowing the tax code and why entries go where they go is greater.