Drake Tax - 1065: K-1 Line 14 Self-Empoyment
Article #: 10149
Last Updated: October 21, 2024
Entries in the Type of Partner section on each K1 screen determines whether or not partnership income is shown in box 14 as self-employment income. Only those partners who have section G marked General or LLC member-manager with an applicable* I1 Partner Type will carry an amount to line 14a.
Refer to the Instructions for Schedule SE for more information regarding which partnership income must be reported as self-employment income.
*Applicable Partner Types:
The 1065 instructions for line 14a state, "Do not complete this line for any partner that is an estate, a trust, a corporation, an exempt organization, or an IRA [individual retirement arrangement]." Self-employment earnings or loss do not show on line 14a of the K-1 for a 1065 if the partner is listed as one of these entities (including an LLC corporation) on the K1, line I1.
If the amount is not flowing, on the K1 screen choose the appropriate Partner type from the I1 drop list and verify if they are a limited or general partner. The default value INDIVIDUAL appears on line I1 of the partner's K-1 if no entry is made in the Partner type field.
Note Some states require an entry in this field because the default value is not used in the state partnership return.
If the amount is different than expected, review Wks SE on the 1065 return. Line 3c is divided proportionately between the general partners based on their end of year percentage. Line 4c is divided between all partners based on end of year percentage. Line 14a on the K-1 is comprised of the sum of lines 3c and 4c from Wks SE. Line 5 of Wks SE flows to line 14a on Schedule K.
Note If you are still attempting to reconcile amounts after reviewing worksheets, check for the screen 8825 option Mark this box to Include in Self-Employment Income.
The amounts can be overridden on the K screen, line 14a or via the KSE screen. Special allocations are available with the SA link to the right of the override line. See K-K1 Comparison in View/Print mode for additional details. The values for line 14a are included in this comparison.
If you prefer to use the alternative calculation for Wks SE, the KSE screen can be accessed from the K screen by clicking the link near the bottom of the Income (Loss) tab. When the alternative calculation is used, you may need to re-allocate the amounts by using the SA link or make additional entries to get the desired results.