Box 14 of the partner’s K-1 displays an entry C showing profit before deductions. Gross income from line 3a is going to line 14c on the K and then to box 14, code C on the Schedule K-1. How is this number calculated?
The amount on line 14c is non-farm income. It is needed for the partners to figure their net earnings from self-employment under the nonfarm optional method on their 1040 returns. For general partners marked as individual, partnership, nominee individual, nominee partner or LLC member/managers the amount is calculated as follows:
- Form 1065, page 1, line 8, Total Income (divided by ownership percentage of general partners vs. limited partners),
- plus Form 1065, Schedule K, line 3a, Other gross rental income (loss),
- minus Form 1065, page 1, lines 5 and 6
Amounts allocated for limited partners are not included on 14C.
You can override the calculation by using screen K, line 14c or make special allocations with the SA link in the same location.