Just to summarize the issue:
- As noted, your W-2 wages and the K-1 are completely separate
- As noted, you can have W-2 wages being reported and taxed while still showing a loss on the K-1
- If the K-1 reflects a loss, you need to complete form 7203 which will then determine if the loss can be utilized on your personal tax return; ie: you have tax basis to take the loss
- If the form 7203 determines the loss cannot be utilized, meaning you do not have tax basis, then the loss will be carried forward at the personal return level.
- Based on the questions, you will definitely benefit from a consultation with a tax professional. Don't be penny wise and pound foolish here. Incorrect tax returns, potential penalties, and IRS scrutiny can be way more painful than the investment in a short consult with a tax professional.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
