I have a schedule K1 loss in an S Corporation of -4022. My basis (after adjustments) in the S corp is only 2598 (according to form 7203). I am an active (sole) participant in this S corporation and all of my investment is at risk. I believe that the amount of the loss shown on schedule E for this S corporation should be adjusted downward to -2598, yet Turbo-tax is still populating this entry with the reported loss of -4022. I am not sure why the result of the schedule 7203 calculations are not being used to update my losses.
In past years, there was not a form 7203, and the instructions simply required that we enter limited loss (instead of the reported loss) in the schedule K1 input. This year we go through the new worksheet, but I don't understand why the result is not being carried through, and whether we are supposed to make a manual adjustment, but if manual, which item do we adjust.
