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Kentucky Form PTE member distributions

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Kentucky Form PTE member distributions

Andrew Modrall

On the Kentucky PTE form, which is used for partnerships, LLCs and S corporations, there is a problem with distributions.    No matter what the Federal tax return might show for cash distributions to each K-1 recipient, what Proseries does on the Form PTE K-1 line 21 is to allocate total distributions prorata to each recipient based on their ownership percentage.     That may work for S corporations, where distributions are supposed to follow ownership percentages, but for partnerships and LLCs, it often happens that distributions do not match ownership percentages.     What a surprise it is to have Proseries create the Kentucky PTE tax return, and have the cash distributions differ on the KY return from what is shown on the Federal return.    This is a big problem (The first two items above are just annoying.   This one actually causes an error to occur.)    It requires the tax preparer to either use a special allocation on the K-1 Worksheet, or to override the amount that Proseries calculates for distributions on each K-1.     What Proseries should do is just match the distributions to each K-1 recipient as shown on the Federal tax return.

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