After reviewing the diagnostic copy of your return, we discovered that the Schedule K-1 for this partnership did not reflect material participation. This is required for the UPE to be correctly reported on Schedule pg 2 Line 28 column (i) on a separate row for non-passive activity. Without material participation, UPE is reported on Form 8582 as a passive loss.
To correct this in TurboTax Online, log into TurboTax and open your return.
- Navigate to the Schedule K-1 topic and edit the related partnership K-1.
- On the page "Choose Type of Activity," check the box for "Business - Box 1." Even though your partnership did not report box 1 income on this K-1, checking this box will allow you to answer the next question.
- On the page "Did you participate?" answer Yes.
- Continue and enter nothing for Box 1.
- Review your entries for Boxes 4a and 14(A).
- Continue through the interview to review your answers and entries for UPE.
- Continue until you reach the K-1 summary page.
- Go to Tax Tools in the left column and choose Print Center.
- Proceed to view your return and check Schedule E pg2 to be sure the K-1 information appears on Line 28 in two separate lines as expected.
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