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Entering Special Allocations in the Partnership Module

SOLVEDby Intuit51Updated October 02, 2023

Entering special allocations in the partnership module.

  1. Go to Screen 29, Special Allocations.
  2. In the left hand column the option to check a box can be utilized to display ONLY amounts to be allocated, Show only amounts to be allocated.
    • Note: If this box is not checked, only items with a green dollar sign are available to be specially allocated. Any amounts without this dollar sign, do not have corresponding amounts entered to be allocated.
  3. Drill down to the item where the dollar amount has been entered and allocate the total between partners, as applicable.
    • Note: the total amount allocated and available will appear at the bottom of each page.

Additional Information:

  • IMPORTANT! If you make entries here (Screen 29) first, the program will not carry those amounts back to Form 1065.  Verify correct totals appear on the partnership's Form 1065, and Schedules K and M-1 before you begin allocating amounts in this screen.
  • In the Section list, the program displays categories of allocable items as folders.
  • Using the Show only amounts to be allocated check box, you can switch between viewing only items with amounts available for allocation, and viewing all Schedules K-1 and M-1/M-2 items that could be specially allocated in these categories. Some items "other" will require a description entered in the original input before it will appear in the Special Allocations screen. (example; Screen 28 "other increases" and "other decreases").
  • At the bottom of the Special Allocations screen, the program lists the partnership total (from Form 1065) to be specially allocated among the partners (Amt. Available for Spec. Alloc.), the total specially allocated amounts already entered for all the partners (Total Specially Allocated), and the residual amount remaining of the partnership total to be allocated (Remaining Amt. to be Allocated). Use these totals to reconcile the specially allocated amounts.
  • Section headings are not allocable items. If you select a section heading, you cannot enter amounts in the Partner Special Allocations Entry area.

 Examples of Special Allocations commonly reported:

  • Partners change in ownership
  • Any item that needs to be allocated differently than the Partner Percentages
    • Guaranteed Payments
    • Contributions
  • Click to learn more information on Entering State Special Allocations on a Partnership Return

When you allocate on Screen 29 Special Allocations, and you also have state information with amounts that are different from federal, you will have to separately specially allocate on Screen 39 Special Allocations for State, otherwise the state will use the partner percentages on Screen 8 Partner Percentages.  Each state will vary on what can be allocated depending on what the Schedule K-1 or K-1 equivalent is reporting.

  1. Navigate to Screen 39 Special Allocations.
  2. Select the state you wish to allocate amounts for from the upper portion of the left navigation panel.
  3. Select the area of income you wish to allocate for from the middle portion of the left navigation panel
  4. Select the partner you wish to allocate to.
  5. Enter the desired amount in the field labeled Allocation Amount.
  6. Repeat steps 2 through 5 as needed.
  • Line 20 Code N will only generate for tax years beginning after November 12, 2020.
  • Amounts for Line 20 Code N will generate automatically based on your excess business interest entries in income screens.
  • If not splitting by profit sharing percentage, use Screen 29, Special Allocations, to allocate the amounts. The amounts will be found under the Section list under Other (Sch. K-1, Box 20) > Business Int. Exp. (for TY beginning after Nov. 12, 2020).

Schedule K-1 instructions for Code N. Business interest expense. For tax years beginning after November 12, 2020, the partnership will report your share of the partnership's deductible business interest expense for inclusion in the separate loss class for computing any basis limitation (defined in section 704(d), Regulation section 1.163(j)-6(h)). This information is necessary if your losses are limited under section 704(d). Deductible business interest expense is reported elsewhere on Schedule K-1 and the total amount is reported here for information only and was already included as a deduction on another line of your schedule K-1. Included in the code N information is a statement providing the allocation of the business interest expense already deducted by the partnership by line number in the Schedule K-1.

  • Investment interest expenses can be entered in:
    • Screen 22, Other Schedule K Items in the field " Investment interest expense" (code 122)
    • Screen 23, Passthrough K-1's in the field " Investment interest expense (H)" (code 140)
  • If the amount for Box 20, code N is to be allocated differently than the profit sharing percentage in Screen 8, Partner Percentage, navigate to the Other Items section of Screen 29, Special Allocations to allocate.

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