K-1 Overrides
PrerequisitesYou should be familiar with or have completed the Income & Related Items exercise in this section. ObjectiveIn this exercise, you will enter override information to specially allocate items to specific shareholder's Schedule K-1's. |
Facts
Enter the following information for a sample client:
| Client number | TUTSCOR7 |
| Client Information | Data entry: |
| Corporation Name | Tutorial S Corporation 7 |
| Corporation DBA | Lesson 7 |
| Fiscal Year End | 12 |
| Accounting Method | Cash |
| Shareholder Information | Data entry: |
| Shareholder 1 Name | Shareholder 1 |
| Shareholder 2 Name | Shareholder 2 |
| Stock Ownership | Data entry: |
| Shareholder Name | Number of Shares Owned at Year End |
| Shareholder 1 | 50 |
| Shareholder 2 | 50 |
| Income | Data entry: |
| Gross receipts | $200,000 |
| Schedule K-1 Overrides | Data entry: |
| Ordinary income | |
| Shareholder 1 | $150,000 |
| Shareholder 2 | $50,000 |
Program Considerations
The program normally allocates items of income, expense, etc. from Schedule K based on the information entered in Screen 6, Stock Ownership, or Screen 7, Change in Stock Ownership. You can use the override fields for each item on Screen 33, Schedule K-1 Overrides to specially allocate individual Schedule K items to each shareholder's Schedule K-1. If you use an override for one shareholder and do not use the override for the remaining shareholders, the program allocates the amounts based the information entered in Screen 6, Stock Ownership to the non-override shareholders. Enter "-1" in an input field when no amount is to be allocated to a shareholder for that field. The program prints a federal Schedule K/K-1 reconciliation worksheet if the total allocated amounts are not equal to 100 percent.
How?
To enter Schedule K-1 Overrides:
- Open the sample client.
- Open the Screen 33, Schedule K-1 Overrides from the Contents tab.
- Select the shareholder in the Shareholder list.
- Enter the dollar amount of each item allocated to each shareholder in the appropriate fields.
Tips & Shortcuts
When you are entering overrides for multiple shareholders, you can press [Ctrl]+[
] to go to the same line of the input screen for the next shareholder.
Review
You should have entered Schedule K-1 overrides for the shareholders in the sample return and produced the following results on Schedule K-1 for each shareholder:
| Schedule K-1 | Shareholder 1 | Shareholder 2 |
| Line H | 50% | 50% |
| Line 1 | $150,000 | $50,000 |
There should be no Schedule K/K-1 Reconciliation generated in the worksheets.
Troubleshooting
Problem: I'm getting $100,000 on line 1 of Schedule K-1 for shareholder 2.
Solution: You have entered an override for shareholder 1, but the program is still allocating the income based on shareholder 2's stock ownership. Enter the correct amount for shareholder 2 in Screen 33, Schedule K-1 Overrides.
Problem: The program is generating a diagnostic and the Schedule K/K-1 Reconciliation.
Solution: Allocate the correct amount to each shareholder in Screen 33, Schedule K-1 Overrides. Refer to the Schedule K/K-1 Reconciliation for actual dollar figures that the program is allocating.