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Common questions about Partnership Recourse and Nonrecourse loans

SOLVEDby IntuitLacerte Tax35Updated July 27, 2021

Below, you'll find answers to frequently asked questions about recourse and nonrecourse loans: 

To enter and generate recourse and nonrecourse loans on Schedule K-1, Item K:

  1. Go to Screen 7, Partnership Information.
  2. Check the box, General Partner/LLC Manager?
    Note — If General Partner/LLC Manager isn't checked and the partner percentages for loss sharing at the end of the year hasn't been entered, the amount entered on Screen 26, Share of Liabilities won't generate on the Schedule K-1.
  3. Go to Screen 8, Partner Percentages.
  4. Enter percentages under loss sharing at the end of the year.
  5. Go to Screen 26, Share of Liabilities.
  6. Enter the Nonrecourse.
  7. Enter the Qualified nonrecourse financing.
  8. Enter the Recourse.

From the Details tab:

  1. On the Detail tab, go to Screen 26, Share of Liabilities.
  2. Enter the amount in Recourse.
  3. Open Screen 29 Special Allocations.
  4. Scroll to the second box Share of Liabilities (Sch K-1, Item M) and open it.
  5. Select the heading Recourse.
  6. Select each partner, and enter the amounts you wish to allocate into the corresponding column next to each partner's name until the amount is zero.
  7. Select the Forms tab and make sure the Schedule K-1 Recourse amounts for each partner are correct.

The program automatically allocates the amount of recourse to the general partners/managing members only based on the relative loss-sharing percentages entered on Screen 8, Partner Percentages. The result prints on the applicable Schedule K-1, item K. Use Screen 29, Special Allocations to allocate the recourse debt as needed, including entering -1 to exclude a partner/member from receiving any amount.

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