In mid 2012, I made an agreement with my business partner that is as follows:
- I sold my claim/intellectual property from my half of our business (a North Carolina S Corp) for 50% share of net operating income year-to-date. This totaled $14k.
- In addition, we agreed that I would receive an extra premium $11k.
- We would retain our 50/50 shares for tax
purposes and he would then dissolve the business and move it to his home state of CA.
I do my taxes via Turbotax, and entered my Schedule K1 from the business (which had a short tax year since it was closed in mid-2012). This schedule K1 is very simple. It has $24k in box 1 for Ordinary business income and then the amount of my half of the net operating income (the $14k) in box 16, "Items affecting shareholder basis" (it is also marked with D) in that box. This is the Form 1120S Schedule K1.
My question is, since this number is XXXXX on my K1, do I have to report is elsewhere, or does the K1 cover it? When I entered my K1 into TurboTax, it increased the taxes I owe, so I'm wondering if I report the $14k that I received if I am reporting it twice.
(Also, I just reported my $11k as "Misc Income", would this be correct?)