Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

How to add a lower-tiered K-1 on state 1065?

I have a partnership that invests in other partnerships and there are 10 state K-1s that have adjustments and apportionments on them. The federal does a good job of allowing me to enter all the federal K-1 info but that same functionality is missing on the state side. Since most of the information would just roll up into the top-tiered state K-1, why can't I just add the lower-tiered state K-1? The state K-1s don't tell me HOW they arrived at their apportionment ratios, they just TELL me what it is. But, on a state return I have to provide all that info, which will be different from the ratio of the lower-tiered state K-1. Which means I have to manually input the state source adjustments and source income (in addition to my top-tiered partnership) and attach the state k-1 to the state return. When the developers could just allow lower-tiered K-1s to be added and then roll up into the applicable fields on the state return. Why does this functionality only exist for Individual returns and not 1065s? Again, why am I adding lower-tiered info (field by field) when it could just as easily be rolled up (for those lines where it easily matches)? Based on my call with support, Lacerte and ProConnect have a screen that allows input of factors by state... which would also be helpful in ProSeries. Someone suggested adding K-1 activity sheets, but I can't figure out how to add them for just a state, or at the state level, without it being considered an additional partner at the upper-tiered level. Should I be switching to another software that can handle lower-tiered K-1 input screens?

0 Cheers
2 Comments 2
IRonMaN
Level 15

You could always try using one of those Intuit softwares on a pay per return basis for those type of returns.


Slava Ukraini!
dascpa
Level 11

I have posted this before as I have a similar situation.  This is not a ProSeries specific problem it's the state tax returns themselves problem.  Apportionment at the business level is typically a calculation of sales, property and payroll within that state.  But receiving a K-1 for a business from a business is not something the state tax returns are designed for.

I have a business client with 23 states.  I called all 23 state tax agencies.  Only  for Alabama did the agent walk-me through how to "get around" the software to report the apportioned income.  Bottom line, in all 23 states I had to force the state return, knowing the presentation was incorrect, but the bottom line was correct.

I also tested Lacerte (as a demo).  It did a better job than ProSeries but it wasn't perfect either.  

These 23 state returns took me a few days to complete.  In my cover letter to the client I explained the presentation versus bottom line issue so if any state sent notices, I was on record.

I told the client I was handing this return off to a large firm.  After a few months the client called me and said he wants me to handle the return as the large firm would not call him back, would not respond to emails.  Bottom line, their service was lousy.  So even though I wanted to get rid of this client, I cannot.