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seanm696
New Member

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

 
6 Replies
Rick19744
Level 12

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

There are two methods you could use to accomplish this:

  • The technically correct way is to complete form 6198 https://www.irs.gov/pub/irs-pdf/f6198.pdf
  • I included a link so you can review the actual form.
  • The other method would be to only include the amount of the allowable loss on your return.  Using this method would require you to maintain records that would allow you to utilize any suspended losses in the future.  If you use this method I would recommend attaching a schedule with your computation.
  • Since you are asking about basis limitation, I am assuming that you are maintaining a basis schedule so you know what your limitation is?
  • Additionally, if you have items in more than one box on your K-1 you are required to allocate the suspended loss among the items on the K-1 (ie: ordinary loss, charitable contributions, etc).
  • As you can see, there is some work involved.  Depending on the $$ involved you may want to consult with a tax professional to get you started on the right path.
*A reminder that posts in a forum such as this do not constitute tax advice.*
zeta
Level 3

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

After that is done, then the next tax year where would you enter this loss that now, you can hopefully claim since the basis is higher now, is carried over/forward?

comboardq
Level 2

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

@Rick19744  Could you point me to the source that demonstrates using 6198 is the correct way to track and deal with basis limitation carryforwards? You might have a comment for my simillar post here: https://ttlc.intuit.com/community/taxes/discussion/s-corp-dissallowed-loss-carryforw[product key rem...

 

Thanks.

Rick19744
Level 12

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

@comboardq not exactly sure what you are asking, however, the instructions for form 6198 would be a good source.

File Form 6198 if during the tax year you, a partnership in which you were a partner, or an S corporation in which you were a shareholder had any amounts not at risk.

Form 6198 deals with at-risk, which essentially is the same as basis for an S corp; if you don't have basis, you aren't at-risk.

The IRS also introduced a new form 7203 to have some consistency in maintaining basis.  In the past, S shareholder's would be required to attach some form of support for losses, but no specific format existed.

I can't tell you the interplay of these two forms within TT, but my guess, is form 6198 will be needed for any limitation of losses within TT.

In reading your linked post, form 6198 is not an entity level form.  This is prepared at the shareholder level.

 

*A reminder that posts in a forum such as this do not constitute tax advice.*
comboardq
Level 2

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

 @Rick19744  Thanks for this info. I understand Form 6198 is implemented at the shareholder level, perhaps my other post wasn't clear.

 

In my case I don't have ANY amount at risk (0 basis), so even while the 6198 instructions say  "...had any amounts not at risk,"  I wonder if that incudes NO amounts at risk. My CPA prepared return did not use form 6198, but attached a shareholder basis worksheet including allowed and disallowed loss carryforwards. I could do the same, but of course this this will be tracked and computed outside of TT, which introduces more possibility of error.

 

If I were to go ahead with this route, what are the mechanics for inputting and notating the offset income? I haven't seen those questions in the K-1 interview process. Would it be acceptable to track these dissallowed losses in the At Risk Wks - S and make sure To note the 0 basis so none of the losses are deducted, at least until basis is created from future income?

 

Rick19744
Level 12

How do I enter a basis limitation for a K-1 that I received from an S-Corp?

@comboardq .  "...had any amount not at-risk" would include having NO amount at-risk.

I do believe TT would track your unallowed carryover losses utilizing form 6198.  This will require you to complete the form within TT.  This may also require utilizing the forms mode to get all of the appropriate information into TT.

Having said that, it appears you have someone maintaining this for you and all you need to do is input the allowed loss into TT when you have sufficient basis (at-risk) to use prior losses.

While this eliminates preparing form 6198, you will still need to prepare and submit the new form 7203.

*A reminder that posts in a forum such as this do not constitute tax advice.*

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