Form 6198

Forum|Forum|6 years ago
January 14, 2020
2 replies
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After an initial Smart Check routine, TurboTax stops on new Form 6198. Highlights Part 1 2.c Other for or schedule. The box is pink. What information populates this box and from what other form?

Respectfully,

Best answer by JulieS

Form 6198 reports gains and losses that are limited by the At-Risk rules. Somewhere in the interview you have indicated that you have a business loss, or loss carryover, that is not fully deductible because some of your investment in the business is "not at risk".

The information may come from self employment (Schedule C), rental or royalty income (Schedule E), K-1 income (Schedule E, page 2), farm income (Schedule F or Form 4835), casualty or theft losses (Form 4684) or sales of business property (Form 4797).

At risk is a test that the IRS uses to see if you can deduct losses from investments and businesses that you own.

The basic rule is that you can't deduct a loss from your investment or business if the loss doesn't actually cause you to lose money.

Money you've invested in your business that is not at risk includes:

Nonrecourse loans; that is, financing for which you're not personally liable.
Cash, property, or borrowed amounts protected against loss by a guarantee, a stop-loss agreement, or a similar agreement.
Money borrowed from a person who has an interest in the business, other than as a creditor.

If you have self employment income in the return try the following:

Open and continue your return.
Click on the word Federal from the menu.
Click on Income & Expenses.
Find Self-Employment Income & Expenses on the list.
Click Review on the right.
Click Review to the right of your business name.
Find Uncommon Situations near the bottom of the list.
Click Edit to right.
Carefully review your answers to these questions.

If you are using Turbo Tax Desktop, installed on your computer, you can look at Schedule C in Forms mode. Look at line 32b to see if this box is checked.

JulieSAnswer

Level 15

At risk is a test that the IRS uses to see if you can deduct losses from investments and businesses that you own.

The basic rule is that you can't deduct a loss from your investment or business if the loss doesn't actually cause you to lose money.

Money you've invested in your business that is not at risk includes:

Nonrecourse loans; that is, financing for which you're not personally liable.
Cash, property, or borrowed amounts protected against loss by a guarantee, a stop-loss agreement, or a similar agreement.
Money borrowed from a person who has an interest in the business, other than as a creditor.

If you have self employment income in the return try the following:

Open and continue your return.
Click on the word Federal from the menu.
Click on Income & Expenses.
Find Self-Employment Income & Expenses on the list.
Click Review on the right.
Click Review to the right of your business name.
Find Uncommon Situations near the bottom of the list.
Click Edit to right.
Carefully review your answers to these questions.

If you are using Turbo Tax Desktop, installed on your computer, you can look at Schedule C in Forms mode. Look at line 32b to see if this box is checked.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

-U3R2Me-Author

Level 2

The Best Answer reviews the process to understand Schedule "C" line 32b that is checked. OK . I am not clear as to how to complete the request for the Other Form Information line 2c Form 6198.

Please help me understand how to provide the information requested for line 2c Form 6198? What specific information is requested and from which form does Turbo Tax obtain the information?

Respectfully

RobertG

Level 12

If you disposed of an activity where you are 'not at risk' for the loss, line 2c is asking how much of a gain or loss you reported on that activity.

If the disposition of the assets was on Schedule D or Form 4797 it goes on lines 2a or 2b.

See JulieS' answer above if you did not have any activities where you were 'not at risk'.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Mitzy20

Level 5

Hello,

I have an MLP/oil & gas partnership.

Last year, (2019) a CPA did my taxes and form 6198 was generated. I had a negative number on line 21.

This year I am using TT (havent filed 2020 yet), and I entered the K-1 per the instructions in TT.

But I did not get form 6198.

Do I need form 6198 and how do I get it to generate?

Thanks in advance.

Mike9241

Level 15

form 6198 is used to limit the deductibility of losses when you're not at risk - for an MLP that would mean you have zero (or negative tax basis). we have no way of telling if this is the case. take this as a generality, every K-1 from an MLP that I've worked with reflects tax basis in schedule L. so if ending capital is negative you're not at risk. Turbotax would have asked a question "all investment in partnership is at-risk" if you check it you're at risk there will be no 6198. if you don't answer it the next question is "some investment in partnership is not at-risk" only checking this would take you to form 6198. read the following

from an investor's guide to k-1 package support states the following for an MLP "ending capital account represents your basis in the partnership at the end of the tax year"

so if ending capital is positive form 6198 was not needed. and if it was positive at the beginning of the year it was not needed last year. you should check the first question all at-risk.