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Partnership Income

Model partnership activities reported on Schedule E, Part II.

Each partnership is modeled as its own entity, allowing you to evaluate the tax impact of individual businesses while also seeing the combined results on the Summary tab.

Holistiplan automatically evaluates passive activity treatment, self-employment (SE) tax, Net Investment Income Tax (NIIT), and Qualified Business Income (QBI) as you complete each entity.

Before You Begin 

To complete an partnership entity, you may want to have:

  • Schedule K-1 (Form 1065 or Form 1120-S)
  • Ordinary business income or loss (Box 1)
  • Prior-year suspended passive losses
  • Participation information
  • QBI information, if applicable

 Getting Started 

Navigate to the Schedule E Income subsection of the Schedule 1 Income section and click the pencil icon in the Partnerships and S Corps row:

  

For scenarios created by copying an uploaded return, Holistiplan automatically creates an entity for each partnership reported on Schedule E, Part II, using the entity name.

These entities provide a starting point. Review each one and enter the remaining financial and tax information.

Alternatively, if the return did not include a partnership (or S-corp), click the + Add Entity button.

 

Adding a Partnership 

First, name the entity to differentiate it from other entries. Then choose Partnership in the Entity Type drop-down menu, followed by the applicable selection in the Partner Type menu. Partner type will determine the taxpayer’s self-employment tax exposure and passive activity defaults.

  

Next, in the Entity Details, indicate the following:

  • Which taxpayer is associated with the partnership
  • Whether the partnership is considered a Specialized Service Trade or Business (SSTB; which will potentially impact any Qualified Business Income Deduction calculations)
  • Participation (Material or not material; necessary to determine passive activity treatment, deductible losses, Net Investment Income Tax, and QBI eligibility.)

  

 K-1 Income 

Enter the ordinary business income or loss from Schedule K-1, Box 1. Additionally, include any guaranteed payments made by the partnership to the taxpayer, as well as any health insurance premiums paid by the partnership on behalf of the taxpayer.

  

Depending on the partnership type, Holistiplan will evaluate whether the income is subject to self-employment tax. If the partnership pays health insurance premiums on behalf of the taxpayer, Holistiplan will include the appropriate deduction in the Schedule 1 Deductions (Above the Line) section.

 Passive Loss Carryforward 

Enter any suspended passive losses carried forward from prior years. Holistiplan will combine prior-year suspended losses with any losses in the current year to determine any offsetting against income in the current year.

 Qualified Business Income (QBI)  

Complete the QBI section if the business generates qualified business income. This information is necessary to arrive at the appropriate amount of the QBI deduction if taxable income exceeds specific thresholds.  

 

 Review the Results 

 Every entity includes a Summary card that updates automatically. 

  

 

Summary Tab 

The Summary tab combines every partnership and S-corporation into a single view.