@Anonymous
- I did exactly per your recommendations (reminder - this is 2018, not 2019 TurboTax).
On K-1 Part II section K, check the "Some investment in partnership is NOT at risk" box - then QuickZoom'ed to Form 6198 "At-Risk Limitations" (first QuickZoom box)
- On Form 6198:
- Part II line 6 entered 0. (prior year losses already exceeded 25000.). This in turn resulted in zeroing out following lines. So the Line 20 amount at risk and Deductible loss Line 21 are both 0.Allowed Loss totals 0, and Amount at risk as of end of year Line 21a is also 0. The Disallowed Losses Smart Worksheet shows the small current year loss amount as Lines 1, and 5.
- Returning to the K-1:
- Section A "Passive Activity Adjustment to Income or Loss - For Regular Tax Purposes"
- Box1 Ordinary income (loss) for Schedule E: line 1a "Ordinary income (loss) pass through", column (b) Suspended Loss Carryover From Prior Year" I entered the -25000. - This automatically triggered -25000 in column (c) Net income (Loss) Allowed as well. It then followed down to the Line 9 Totals for both columns (b) and (c) as -25000.
- I did the same for the Section B AMT equivalent.
- Schedule E: Then the K-1 changes apparently automatically populated Section C "Income and Loss Reported on Schedule E, Supplemental income or Loss" with the following:
- Entry 1: with LLC name: 0 amount in column (h) Nonpassive Income and Loss column (h)
- Entry 2: with PYA name: 25000 in Passive Income and Loss column (f)
- Are these the expected columns to which these amounts should report?
- BTW, in the K-1, I noticed that Part II section L "Partner's Capital Account Analysis" Beginning Capital Account and Ending Capital Account values both show the same value: $6k and change, and the accompanying "Tax Basis" box is checked. Is this of concern, and should I handle this or ignore it?
- Returning to Schedule E, Part II:
- Line 27 the Yes box is checked "are you reporting any low not allowed in a prior year due to the at-risk, basis limitations, a prior year unalloyed loss from a passive activity..., etc."
- Lines 28 entries, both the LLC and the PYA (same EIN as LLC) lines have the (f) "Any amt is not at risk" box checked.
- Then in the following Passive and Nonpassive Income and Loss columns:
- the LLC line shows 0 in the Non passive Income and Loss column (i)
- the PYA line shows 25000 in the Passive Income and Loss column (g)
- Then this all totals down to lines 31 and 32 "Total partnership and S corporation income or (loss)" = -25000.
- This in turn combines to produce a Total income or (loss) value in line 41.
- Then this Schedule E Line 41 value shows up on Schedule 1 Additional Income Line 17 "Rental real estate, royalties, partnerships, etc." This, I believe is the expected outcome. Any comments?
Once this is settled, I move on the amended State (CA) tax form...
