K-1 incorrect loss on Schedule E

Forum|Forum|3 years ago
March 19, 2023
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I'm confused about why my K-1 S Corp losses are being brought forward to Schedule E. My stock basis is 0 and there is no debit basis. I have a loss from the current year and a carryover lass from prior year. Both are being brought forward to Schedule E line 28 column (i) as separate items.

Form 6198 has the sum of both losses on line 5. Part II has 0 on line 10b

The At Risk Wks S has the current years loss and the carryover loss on A line 1.1. The sum of the losses are in the Allowed column and carries through to A line 8.

Form 7203 is correct and shows the sum of the current year and prior year as carryover losses.

I tried overriding the allowed column on the At Risk Wks S A line 1.1 and forced it to 0. This changed Schedule E line 28. The entry for the carryover loss is still present in 28(i). The entry for the current year now has a value equal to the carryover loss from the prior year in 28(k) income column. The net effect is that a 0 loss is on Schedule E.

This raises a couple of questions.

After overriding the allowed losses on the At Risk WKS A, why does Schedule E handle the prior years losses in th way it did?

Why isn't TurboTax disallowing the loss in the first place?

Rick19744

Level 13

This is an area that TT needs taxpayer input as TT does not maintain your basis schedule.

I would not override the loss. Too many issues with doing so.

What you need to do is find out where form 6198 Part II line 6 is driven from. Once you do, you need to input zero on this line. Appears that since line 10b is correct, this should have resolved the issue.

The next item I would look for is to make sure the form 6198 is linked to that specific K-1. Can't tell you how to accomplish that, but it does need to be linked for the software to properly handle the at-risk limitation.

If the above doesn't resolve the issue, reply and I will use a "phone a friend" helpline.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

Doc99Author

Level 2

Thank you for your suggestions. I'll dig into it again this weekend.

Doc99Author

Level 2

Also, I believe the figure on Line 1 of the 6198 should include an amount that was transferred in from a prior year return. Although I cannot test that, at the moment, I would not override that figure since doing so would, indeed, prevent e-filing the return.

Note that you can make entries in Forms Mode directly on the K-1 at-risk allocation worksheet as well as on Form 6198 itself (in most instances without having to resort to an override).

Thank you. I appreciate all the input.

Form 6198 is indented under the K-1 S in the forms list.
I went into the filing section and it does still offer to efile.

I previously tried overriding the Allowed Loss on the Schedule K-1 At-Risk Limitation Allocation Worksheet. That has the same effect as overriding the loss on line 1 of Section A, Passive Activity Adjustment to Income or Loss, of the K-1 S form. Is one method better than the other?

I'm still curious as to why both methods tried have what looks to be odd entries on Schedule E. The net effect is that no loss is applied on Schedule E. It just looks odd that TT made two entries in that manner.