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Allocation

Allocation of expenses in the Partnership/S Corporation worksheet

The Partnership/S Corporation worksheet is 1 of 4 worksheets that show how expenses are calculated. These worksheets are available in the
Expenses
 folder in Forms view.
To view this worksheet, right-click and select
Switch to Form
, then select the
Expenses
 folder.
  • This worksheet is prepared for each partnership or S corporation activity in the
    K1 1065, 1120S input screen
     folder.
  • Accounting income
    :
    • Income reported on a 1065 or 1120S Schedule K-1 is only considered for the tax basis allocation of expenses. The actual distributions received from those Schedule K-1s (entered on the
      K1-3
       screen) are considered for the accounting income basis of allocation of expenses, unless you mark the
      Include income reported
       checkbox on the
      Dist
       screen in the
      Allocation
       folder.
    • The accounting income line on the worksheet shows how the distributions were spread across the various income categories. Distributions in excess of income received are listed in the Ordinary Business column. The amounts on this line transfer to the Income line on the Allocation of Expenses by Income Type—Accounting Income Basis Worksheet.
  • Portfolio income:
     This line of the worksheet summarizes the portfolio income of the activity.
  • Other deductions:
     Other deductions reported on Schedule K-1 lines 13L (1065) or 12L (1120S) are only allocable against the portfolio income categories of that activity. To change the allocation, enter the other deductions on the
    Deduct
     screen in the
    Deductions
     folder instead of the
    K1-2
     screen for the activity. These allocated amounts transfer to the Other deductions line on the Allocation of Expenses by Income Type—Tax Basis Worksheet.
  • Allowable charitable deduction
    : You can't report the charitable deduction for an activity on the return in excess of the income from the activity. This portion of the worksheet shows the limitation. The allowed portion transfers to Form 1041, Page 2, Schedule A.
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