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Updated about 8 hours ago on . Most recent reply presented by

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Alex Murkes
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Trying to understand K-1 with multiple sources of 199A income/loss

Alex Murkes
Posted

Hi everyone. I hope a kind soul will be able to point me in the right direction.

I'm not an RE professional and never will be, absolute majority of my income comes from W-2 and 1099s.  I have one rental single-family house, and I recently invest in several RE partnerships.

Last year I invested in a RE partnership that is a fund, which invests in deals from the same investment firm. The K-1 has the following incomes/losses:
Box 1: 335
Box 2: -2,128

It also has interest income (box 5), ordinary dividends (box 6a), and other deductions (box 13, code AE).

Then down below there is a list of all LLCs involved (the fund itself and LLCs it invested in), each listing Section 199A QBI attributed to that LLC (each LLC has its own EIN). It also states whether this income is included in Box 1, Box 2, or both (only the fund itself has both activities).

When adding all of these together (incomes - losses), I end up with -1,791. However, Box 1 - Box 2 = -1,793.

QUESTION 1: shouldn't these add up to the same number?

My understanding is that I need to create separate entries for Box 1 (ordinary income) and Box 2 (rental income), as if these came as two separate K-1s. Also, TurboTax is telling me to create a separate entry for each LLC. This will result in 10 entries total (2 for the fund itself, plus 8 other LLCs). This is very tedious but doable (provided I resolve Question 1).

QUESTION 2: am I really required to enter each LLC separately? If not required but only recommended, what will I lose if I don't do it?

Finally, it said somewhere that the K-1 attachments or notes should indicate how to split other numbers into these separate entries. There is nothing about this in my K-1.

QUESTION 3: how do I allocate other numbers across LLCs? My guess is that I can allocate interest and dividends entirely to the fund itself, splitting them probably makes no difference. What about the deduction in box 13?

Thank you for reading this far and for any insight you could share!

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