Schedule E in TurboTax does not allow for reflecting limited partner losses

[mikeynyc123]

Schedule E should allow for reporting partnership losses and income as per the reference below from Turbotax. However, in turbotax desktop application and even online when I select schedule E, it only allows me to select "Rental Property" or "Royalty Property or Payment". There is no selection that allows me to to select a partnership loss. Can you please urgently advise how I can fill in a schedule E from scratch to reflect losses in an investment partnership where I invested as a limited partner in an LLC?

Also, are losses in this situation deductible from W2 income or only against passive gains?

"If you are a partner in a business venture, the partnership will report your share of business income, expenses, gains and losses on a Schedule K-1. If you receive this form, you will need to have it handy when filling out the Schedule E since the amounts you input on Schedule E will mirror those on your K-1."

https://turbotax.intuit.com/tax-tips/rental-property/video-filing-schedule-e-supplemental-income-and...

[AmyC]

1. Yes. All the losses are on your K-1. You simply need to enter the k-1 form and the program will generate the Sch E needed.

2. It first goes against long term gain, then short term gain. If there is still a loss, you can claim up to $3,000 against your regular income. The remainder will be a carryover for future years. See How to carryover a business loss from K-1.

[mikeynyc123]

Hi Amy - 

Unfortunately this LLC did not provide a form K1, but just a statement of loss with supporting documents in a word file and details on my investment. Is this sufficient for me to fill in a schedule E, and if so, how do I fill in the schedule E for a limited partner (myself) that invested in this real estate fund without going through the K-1 form process?

Also, if one is filing MFJ, does the amount one can claim go up higher than $3000 against regular income in a given year? Is there any way to be able to claim MORE than 3k a year from a loss in an LLC investment as a limited partner against w-2 income? I do see in Schedule E part II there are boxes that say "passive income and loss" and "nonpassive income and loss". Wondering how I can claim the entire amount ~20k into the non passive bucket. 

Thanks much!!

[Cmbmichael]

I have a similar problem.  I entered a non-passive deduction on the K-1 form, but the deduction did not populate on Schedule E and was not subtracted from my taxable income.  

[RobertB4444]

Can you please give some more information?  What box was this deduction listed in on your K1 and are you certain it was non-passive?  And the schedule E usually nets out the income from the K-1.  Are you certain it wasn't already deducted?

@Cmbmichael 

[Cmbmichael]

The deduction was listed in box 13, code ZZ.  I have in writing from the partnership issuing the K-1 that it is considered a non-passive deduction and that should be deducted from my federal income on my individual tax return.  I have looked carefully at the 1040 form, and the amount was not deducted anywhere.  It seems as if it should be deducted on Schedule E, but I can't enter it manually there.  Any thoughts?

[RobertB4444]

Code ZZ doesn't get carried anywhere,  That's informational.

If you are sure that this is a legitimate deduction then I would deduct it directly on the K1.  the IRS has received a copy of the K1 and should be aware of the deduction.  So deduct it from the amount that you are entering as the box 1 income and it will net out to the correct amount.  Be sure that this is a legitimate deduction and save copies of everything that justifies the new entry.

@Cmbmichael 

[kr071]

Hi @RobertB4444 It appears that what used to be box 13, code W is now code ZZ for 2023 taxes. In the past, when I chose code W and entered an amount, on the next page of the EasyStep, I would get an option to select "Nonpassive deductions to be reported on Schedule E, page 2". However, in 2023 Turbotax desktop version, when I select code ZZ, I do not have that prompt. As a result, Schedule E, page 2 has blank for the amount I need to deduct and I cannot enter it directly on Schedule E either.

Turbotax needs to fix this missing prompt in 2023 desktop version ASAP.

Do I have any other options? Your suggestions are most welcome. Thank you!

[PatriciaV]

In TurboTax for Desktop, go to Forms Mode and open "K1P Addl Info" under the related K-1 Partner form. Scroll down to Line 13 Code WW to ZZ, line 6. Enter a custom description on the yellow line and the amount in the yellow box. Your entries here will appear on Schedule E page 2. 

@kr071 

[Cmbmichael]

I entered the amount onto the K-1 Addl Info form Line 13 Code WW to ZZ, but it did not carry over into Schedule E p2.  I did not see a yellow box.

[kr071]

@PatriciaV 

That worked for me. Thank you very much for your help!