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Level 1
May 23, 2026
Question

1065 Forcing a state-specific K-1 rental losses without apportionment

  • May 23, 2026
  • 2 replies
  • 0 views

I am preparing a 1065 for a DE-based holding company. The partnership has zero direct operations, property, payroll, or sales. Its only activity is receiving passthrough K-1s with rental real estate losses already sourced to specific states.

I need these state-sourced (CO, IL, & DE) K-1 losses to flow correctly to my client's state returns and outgoing K-1s. However, since the lower-tier entities already did the apportionment math, I want to avoid using the standard apportionment screen, as it doesn't seem allow me to accomplish what I am trying to do or give me a way to enter exact amounts.

What is the exact input path or override method in ProConnect to hard-code these passthrough K-1 rental losses directly to their respective state returns? In the passthrough K-1's input there is an input for federal but no option to source this to a state. The state if different input doesn't allow DE, IL, or CO inputs.

2 replies

Moderator
May 25, 2026

Hi @iomgm3  Welcome to the Community!  Here is a support article that may or may not be helpful: Allocate income from passthrough K-1 on a business return in ProConnect Tax. For more assistance, we'd recommend contacting ProConnect Support. 

PhoebeRoberts
Intuit Community Champion
May 26, 2026

The partnership should have allocated some apportionment factors to you. Use those factors. If they didn't allocate any factors to you, you might have to invent some that arrive at the appropriate answer.

State law specifies whether you're allowed to allocate K-1 income or whether you are stuck apportioning it. I'm not familiar with the law of the states you're working with, but the forms instructions generally explain it.