I'm not sure what you mean by "report the loss".
Do you mean that I have to put the loss on my forms? Yes, my K-1 shows the business loss. My form 7203 shows the business loss.
Do you mean that I have to claim the loss on my personal taxes (allowed by basis)? I don't know why you HAVE to; it only reduces my tax liability which I don't think the IRS cares if you miss a deduction.
Do you mean that I have to write in line 47 column d the maximum debt basis ($600) and I can't write less ($0)? Thus I have to accept the loss of basis and accept that I can't carry over all losses whether I claimed the business loss or not on my personal taxes.
