I have a general partnership that had a net loss of $7,000. On the Form 1065 Schedule K-1, do I enter the $7,000 loss on line 1 as well as line 14? Also, do I report the the $7,000 loss on Box 2b of the EIC Worksheet B that goes with my 1040?

ANSWER

The BIDaWIZ Team's Answer:

You would report your share of the business loss from the partnership on Box 1. You would report the entire amount in that box on the Schedule K-1. As for Box 14, did you have any guaranteed payments from box 4? If so, the self employment earnings would include both the loss in Box 1 and the guaranteed payments in Box 4. Normally, when you have a net profit on Schedule C line 31, you would report that amount on Schedule SE line 2. However, since your loss from the Schedule K-1 is greater than the income, you wouldn't need to file a form SE. Also, you would report the net Schedule K-1 loss and the Schedule C income on Box 2b of EIC worksheet B. This then flows to your form 1040 lines 38 & 64a.