Enter special allocations for partners
A partnership agreement can require an item to be allocated amount the partners in a different manner than the default method. You can accomplish this by creating a special allocation.
The default allocation method for the entire partnership uses the partners' profit ratio to allocate distribute items that aren't specially allocated. The ratio's calculated from the beginning partner ratio information entered for each partner. If no ratios are entered, the system computes beginning ratios based on the amount entered for each partner's beginning capital balance. Allocation defaults can be changed, if needed, in
Organizer
, General Information
, Return and Print Options
, Allocations Options
.note
Partner allocations must be enabled for amounts to carry through to the partners' K-1s. This can be completed in
Organizer
, Partner Information
, Allocations
, Allocation Options
, and then Allocation Defaults
.To specially allocate items to partners, follow these 2 steps.
Step 1 - Create and assign special allocation code
- Go toOrganizer,Partner Information,Allocations, and thenSpecial Allocations.
- SelectAdd new Special Allocation Code.
- Enter a 2-character code. You can use any 2 alphanumeric characters, such as RR, as long as it doesn't begin with a zero.
- SelectSave. Your code now appears in the Special Allocations section.
- Next, enter a description in theDescription (Mandatory)field.
- Select one of these options to allocate any remaining amounts not specifically allocated:
- Residual- The system allocates the remaining balance of the item to the partners who aren't involved in the special allocation based on their default ratios, excluding the ratios of the partners already receiving special allocations.
- Piggyback- The system allocates the residual balance of the item to all partner based on their default ratios.
- Enter either ratios or dollar amounts, but not both. To allocate zero, enter NONE.
Step 2 - Enter special allocation
- Go toOrganizer,Ordinary Income and Deductions, and thenIncome Summary.
- Enter your special allocation code in theAlloc Codefields you want to specially allocate.
- You can review the amount specially allocated by going to the form and line item inTax Forms, right-clicking for the context menu, and selectingAllocation Display.
tip
- In some instances, an item can be specially allocated without an amount being entered. This occurs where the amount comes from a lower-level detail, or from a detail entered elsewhere in the return. These are usually override fields.
- Don't specially allocate at both the top-level and at the detail or activity level for the same item. This can produce incorrect results.
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