passive loss rules

Forum|Forum|5 years ago
May 4, 2021
1 reply
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My K1 has a loss in Box 1 but a gain in Box 2. I have filled out a worksheet for each activity. Can I reduce the amount of the loss in Box 1 by the gain in Box 2 before calculating how much of the loss I can deduct this year.

ThomasM125

Level 15

On a form 1065 schedule K-1, box 1 reports ordinary income or loss and box 2 reports income or loss on a rental activity. The two have separate tax treatments, so you cannot necessarily net them together. However, TurboTax will determine the proper tax treatment of them automatically in the program, but you must enter them separately like you have done.

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attykss1Author

Level 3

Thomas: my questioned pertained to my 1040 return. How does TurboTax determine the tax treatment for ordinary business losses and rental real estate income automatically? I don't see that being done in TurboTax Premier

ThomasM125

Level 15

The business loss would flow to schedule E, page two and the rental income to schedule E, page 1. The totals from schedule E would then flow to form 1040, schedule 1, line 5.

You can see form 1040 and the numbered schedules while working in the online TurboTax by following these steps in the program: