How do you modify K-1's when income/loss is not in proportion to their partnership interest

[eva]

I have an LLC with two members, 60%/40% partnership.

However, per their Operating agreement, the 60% partner reports 100% of income/loss until he recovers his investment.

Where do I change this so that 100% income/loss is reflected on his K-1 and the 40% partner's is zero?

Thank you.

[dascpa]

Look at the Special Allocations section on the K-1 worksheet for each owner.

[eva]

Thank you much for the response. I have entered 100% and 0% respectively and the 100% amount of the loss for the 60% partner but nothing changed.  The K-1's still show the 60/40 split.  :((

What else to do?

[dascpa]

Special Allocations have codes (1-4) and (A-D).  you need to enter the code on the Schedule K worksheet so the program knows to use those numbers/percentages instead of the standard numbers.  That's what those tiny little boxes are for. SA code.

[eva]

Forgive my ignorance, but I don't see any tiny boxes. 

This is what I have entered under Special Allocations:

First I have only entered the percentage, then since it didn't change anything, I also have entered the actual loss amount.

By ratio:                                                      By Amount

#1 100%                                                     A  -25,598

#2                                                               B

#3                                                               C

#4                                                               D

                                                                   T

                                                                   U

                                                                   V                                                                   

[dascpa · Accepted solution]

First off on the K-1 worksheet it's EITHER % or $, don't enter both.

I said on the Schedule K worksheet enter the code.

[eva]

Yes; that's exactly what you said. Searching the area on the K...

[eva]

Yay! Did it. A million thanks to you.