1065 Top Partnership Case Study Facts: Data Entry

Top Partnership Case Study Facts: Introduction

This page is used to provide help when you are not sure where to enter data. You do not need this page if you know where all the information belongs.

Forms are accessed from the Forms List window at the left of the screen. Make sure Organizer is selected.

General Information

Review the entered data and input remaining amounts through the Organizer.

Set the system to automatically compute by selecting Compute > Auto Compute. Turn it off while doing data entry but periodically allow the system to calculate and clear the holding file.

Two levels of compute are available in the 1065 system.

  • The system computes the 1065 and all related schedules except Schedule K-1 in the first compute. You can then review the 1065 and verify that all amounts, including Schedule K totals, are correct.
  • The second level of compute allocates the amounts on Schedule K among the partners and all Schedules K-1 are completed. Turn this second level on and off by selecting Options from the menu bar and clicking Partner Allocation. When a check mark is next to Partner Allocation, the feature is turned on.

You can also activate the Schedule K-1 Allocation option by going to the Organizer tab and clicking Enable Partner Allocations. Then click the box for Enable partner allocation.

Forms are accessed from the Forms List window at the left of the screen. Click the Organizer tab to display a list of all Organizer forms.

Check and clear diagnostics and overrides before printing.

Setting Partnership Options and Defaults

  1. To review the partnership information, select Partnership Information > Partner by Partner Data.
  2. Verify the partnership information.
  3. To review the return options, select General Information > Return and Print Options. Click each tab to view the various options.
  4. Click the Allocations Options tab and verify that Effective, Profit, and Residual are the allocation defaults.
  5. Select Partner Information > Common Partner Data > Common Partner Information tab.
  6. Verify that defaults for All Partners are general, individual, domestic, active, and taxable options.
  7. Click the Liabilities Allocable tab and view the various options.

Setting Up Partners

  1. Select Partner Information > Partner by Partner Data.
  2. Click Columnar Partner Entry.
  3. Verify and enter any missing information:
    • Partner Number
    • Partner Name
    • Address
    • Social Security Number
  4. Select the Ratios\Units tab.
  5. Verify the Partner Ratios.
  6. Select the Beginning Capital tab.
  7. Enter the beginning capital balance for each partner.

Cash Distributions

  1. To enter cash distributions, select Partner Information > Common Partner Data.
  2. Click the Contributions/Distributions tab.
  3. Enter the date and amount of the distribution.

The system will allocate the distribution to each partner based upon their beginning ratios. Only the date and total should be entered.

Transfer of Interest

  1. Select Partner Information > Transfer of Interest > Transfers > Add New Transfer Date.
  2. Enter 03/31/2019 and press Enter.
  3. Enter the partner number (transferring and receiving) and the percent (.5) in the ratio column for the first transaction.
  4. Select Add New Transfer Date.
  5. Enter 11/30/2019 and press Enter.
  6. Enter the transferring partner number. Leave the receiving partner numbers blank for a transfer to all partners for the second transaction.
  7. Click the box next to Withdrawing from partnership, since Penn is withdrawing from the partnership.

    Penn will not be proforma’d as a partner for the 2020 return.

Purchase of Assets

  1. Select Ordinary Income and Deductions > Depreciation and Amortization > Top Partnership > Asset Detail > Add New Asset.
  2. Enter Various Assets. Click OK.
  3. Enter depreciation information on the Depreciation Detail screen.

    For MACRS or ACRS methods, leave the Life field blank unless electing straight-line.

Pass-Through Entities

  1. Select Activity Information > Pass-Through Entity > AMOS Partnership.
  2. Click Pass-Through Entity Activity underneath Amos.
  3. Click the K-1 Line > Lines 1-15 tab.

    In preparing a 1065 return, the partnership is only a conduit for the items received on the K-1. The items entered on the screens contained in Organizer under Pass-Through Entity simply flow from the Amos Partners K-1 through to the Top Partnership Schedule K. The Type of Activity on the Pass-Through Entity screens are used only for the printed description on the activity schedule.

  4. Enter the amounts on the proper lines on the K-1.
  5. To enter interest income for the Pass-Through Entity, select Special Allocations Detail > Page 1. Enter the description and amount in the Interest Income section.
  6. Click the K-1 Line > Lines 16-20 tab.
  7. Enter the amounts on the proper lines on the K-1.

    The items may be specially allocated if the partnership agreement had so specified.

Schedule K

  1. Select Sch K > Income Summary.
  2. Click the Income-Other Interest tab.
  3. Enter the interest income from First Bank.

    Had you entered $14,000 interest income directly on the Income Summary screen in the Override Amounts fields, then interest for Amos Partners would not flow in and add to this amount to yield the total interest income for TOP Partnership.

  4. Select Deduction Summary.
  5. Click the Deductions-Portfolio tab.
  6. Enter the expenses related to portfolio income. Use Portfolio Expenses as a description.

Special Allocations

  1. Select Partner Information > Allocations > Special Allocations > Add New Special Allocation Code.
  2. Enter a 2-character Special Allocation Code, such as C5, and press Enter.

    Do not use zero as your first character when creating an allocation code.

  3. Enter the description Contributions.
  4. Click RESIDUAL to select as the allocation method.
  5. Enter .10 next to Olson in the ratio column.
  6. To enter special allocations for cash contributions, select Partner Information > Common Partner Data.
  7. Click the Contributions/Distributions tab.
  8. Enter a Contribution date of 06/30/2019 on the second row.
  9. Enter $1,500 for Capital Contribution on the same row.
  10. Enter the two-digit allocation code you created (such as C5) next to the contributed amount.

Balance Sheet

  1. Select Balance Sheet and Reconciliation > Sch L.
  2. Select the Asset tab.
  3. Verify the beginning and ending balances.
  4. Select the Liabilities/Capital tab.
  5. Verify the capital amounts.

Do not enter the beginning or ending capital. The system will automatically carry the beginning balance and compute the ending balance.

Transmittal Letter/Filing Instructions

  1. Select Letters and Filing Instructions > General Options.
  2. Select Transmittal Letter Only - No Filing Instructions. Otherwise, both a transmittal letter and filing instructions will be prepared.
  3. Select Compute > Full Recompute on the toolbar.
  4. Verify that Ogden, UT is the Auto Selected Center.
  5. Select Letters and Filing Instructions > Letter Options.
  6. Scroll down to Edit Signature Block Options, and enter your name and title in the Signer’s Name and Title fields.
  7. Select Letters and Filing Instructions > Partner Letter Options.
  8. Select Print partner letters.

Completing the 1065 Computations

Set the system to automatically compute by selecting Compute > Auto Compute on the menu bar. When completed, review Form 1065, Schedule K, and all activity amounts.

Enable Allocations to Schedule K-1

Once you are satisfied with the results on the federal form screens, select Enable Partner Allocations, then click the box Enable partner allocations.

Select Compute > Full Recompute on the toolbar. When complete, review K-1 data by selecting the Tax Forms tab and view each partner’s K-1.

 

 

 

Case Study Facts/top_data_entry.htm/TY2019

Last Modified: 03/19/2020

Last System Build: 06/17/2021

©2019-2020 Thomson Reuters/Tax & Accounting.