K-1 incorrect loss on Schedule E (again)

[Doc99]

I have a loss on line 1 of my K1-S Corp. Let's call it -X. My stock basis is zero. Line 35c of Form 7203 (allowable loss from stock basis) correctly shows the allowable loss amount, lets call it 0. However, Schedule E, p2 has the full loss from line 1 of my K-1 on line 28i which then transfers to Schedule 1 as negative income.

I asked a similar question last year, and the method that worked was to adjust this on the At Risk Wks -S for the S-Corp. In this years 2023 version, there is no At Risk Wks-S for the S-Corp. I tried overriding it on Schedule E, p2 but that will not allow for electronic filing.

Where is the correct place in Turbo Tax 2023 to deal with this?

Thanks,

Doc

[AmeliesUncle]

TurboTax is not set up to limit losses due to Basis.

You need to manually limit it by only enter the allowable amounts on the K-1 (if you Basis is zero, then all numbers on what you enter for the K-1 would be zero).

Then you manually keep track of the unallowed Basis.  At whatever year in the future it is allowed, you will enter a second K-1 called "PYA" and enter the amounts of the then-allowed loss.

[Doc99]

That seems a bit opaque and I try not to change what is reported on the K-1 that was provided by the S-Corp. It would work, but I'd hope there would be a better way to handle it. 

[AmeliesUncle]

If you are using TurboTax, that is how you do it. 

If you want a program to deal with it automatically, you will need to use some other brand of tax software.

[Doc99]

You are correct that the loss needs to be manually adjusted. I figured out why the At Risk Wks - S form was missing. During the Step-by-Step entry of the K-1, I neglected to click the box that I had a prior year suspended loss. Once that box was checked, the At Risk Wks -S is added to the return. By entering the allowable loss on the worksheet, the correct loss is brought forward to Schedule E and makes the forms for the K-1 and 7203 correct. The overrides on the worksheet don't impact being able to e-file. 

[AmeliesUncle]

You have a loss limited due to Basis, not At-Risk.  Despite what some people say, you are not suppose to file the At-Risk for if the loss is limited due to Basis.  They are two different things and the At-Risk form is only filed if you have enough 'regular' Basis but you have some money Not-At-Risk.

[Doc99]

I see your point and defer to your knowledge of form 6198 (at risk limitations) not being filed. I dug a bit deeper.

First off, my last reply was incorrect in stating that the K-1 in Turbo Tax matches what I received.  When the step by step asked me if I needed to adjust my S-Corp loss, it did so on the line 1 of K-1 . I deleted form 6198 from my return and it still passes all the checks. Remembering exactly what I did to get the adjustment question to come up in step by step is a bit hazy at this point. I think it was related to checking the box in the step where it asked if I had previous suspended losses. That was when the At-Loss worksheet and form 6198 was added. After filling out the At-Loss worksheet I went back through the K-1 step by step section and I think that is when I was asked about making the adjustment to the loss. 

Regardless, at this point I have deleted form 6198 and the At-Loss worksheet. Everything passes the review. I made notes for myself so when I forgot all this next year, I can review the notes. 

Thank you for your help.