How is the gain on sale of building entered in 1065 if allocation is different than ordinary profit allocation?

[doubleg10]

Partnership sold its commercial building and each partner is to receive an equal share as their ownership percentages are the same.  The profit/loss percentages are not equal as it is based upon a different formula/methodology.  I have put the gain as a special amount in the K-1 worksheets but it is not calculating it as I would expect.

[Norman2001]

Have you adjusted the Profit/Loss/Own percentages in the K-1 worksheet?

[doubleg10]

Yes.  The profit and loss percentages are different than the ownership percentages and have been input as such into the K-1 worksheets.

[Norman2001]

I've never had your situation, but have looked into using the special allocation feature? 

[doubleg10]

According to what I have read in the support portion of the software, the special allocation is supposed to do what I am trying to accomplish.  Unfortunately, it has not been providing me the solution that is expected.  I will dig deeper.  The gain is ordinary income, but it still needs to be split based on ownership percentages.

Thank you for your assistance.

[Norman2001]

It might be worth calling Intuit (if you haven't already), maybe they can help. Good luck.

[dd4vols]

On the Schedule K-1 WKS, there are the special allocations.  Use the "A" part, and put the $$ amount you want for each partner, on each partner's Schedule K-1 wks.  Then on that line item on the schedule K (page 4 of the 1065), put an A there.  and so forth.

[doubleg10]

Ok. I will try that.  I did not do the second part.  Thank you.  I will let you know.

[doubleg10]

Greetings:

I have tried the special allocation for each 19 partner but it does not work.  I have spent close to 2 hours with tech support and they have not been able to resolve it.  It was escalated twice to no avail. They say their software is processing correctly.  I say they do not know how to write code correctly.

Here is the exact situation:

Revenues are 213,105 (page 1, line1)

There is a 115,766 loss from the sale of a commercial building that is reported on Form 4797 and it is an ordinary loss as the property was held less than one year.  The loss is reported on page 1, line 6)

Total income, page 1 line 1 is 97,339 (213,105 less 115,766)

The total expenses of the partnership are 64,377 (page 1, line 21)

Ordinary business income (page 1, line 22) is 32,962.  This number is the mathematical result of 213,105 revenue less a loss of 115,766 less expenses of 64,377.

However, the ordinary income of the partnership is 148,728 (213,105 less expenses of 64,377).  This operating income is to be allocated among all 19 partners according to the profit/loss allocation.  Each partner does not receive an equal allocation of the 148,728.

The 115,766 loss due to the sale of the commercial building is to be allocated equally to each of the 19 partners as each partner owned an equal share of the asset.

The Pro Series software is taking the ordinary income of 32,962, page 1, line 22, and allocating it to each partner based upon their profit/loss % as indicated on their specific K-1 worksheet.  This is incorrect.  The 148,728 needs to be allocated to each partner based upon their profit/loss %.

The Pro Series software is taking the Form 4797 loss of 115,766 and allocating it properly to each partner on line 10 of their respective K-1 because I indicated on the K-1 worksheet the specific dollar amount (loss of 6,093) that each partner is to receive on the special allocation line.

Many thanks to all who take a look at this post.  Your assistance is greatly appreciated. It may come down to overriding the amounts for line 1 of each partner's K-1 and either e-file or paper-file.