This is clearly a bug in TurboTax which no TurboTax employee will acknowledge.
If you have a loss on Box 2 (real estate losses), TurboTax 2025 automatically assumes it's passive. However, in many cases, Box 2 losses CAN be non-passive - for example, with short-term rentals (where you materially participate). The other big one is REPS status. There's no way to get around this.
I think you can override this behavior by pretending that the loss was on Box 1 - because after all, at least on the federal return the Schedule K-1 is not electronically sent as part of the personal return. But really, it's a bug in TurboTax - incorrectly typing in the K1 is obviously not a proper solution.
