I have (and have had for several years) received a K-1 with amounts in box 1 and 2. I have always followed the TT advice and entered two separate K-1s for each box. However I have also always entered all the other boxes on each K-1. I didn't think of this as an error until today. I always have box 14 (A), box 17 (A), box 18 (C), and box 19 (A and C) with amounts inside them. So these amounts have been entered twice on each K-1, the one for box 1 and the K-1 for box 2. I'm beginning to think this has been a mistake for several years. What is the correct way to handle these boxes on the K-1? Do certain boxes go with box 1 and others with box 2? Am I making a mistake by adding them to each K-1. Do I need to fix the returns from the past?
I too have been getting a K-1 each year for the past several years from a limited partnership that finances mortgages and manages rental properties on foreclosures or real estate owned. Box 1 ordinary business is the financing income and Box 2 is from the real estate property management income. I have been splitting the K1 into 2 parts as you said but I think it is incorrect to duplicate the share of gains and deductions on each part as you would be double counting. I have been putting the obvious real estate gains and deductions in part 2 and the others in part 1. However I don't think it matters which one as it will flow through to the same part of your 1040 or 1041 if you have a trust.
You may want to amend your returns if it's substantial or material but I'm not a preparer or offering you tax advice. Hope this helps.