I'm a limited partner in a partnership that rents out farmland we jointly own, and every year the firm that prepares our K-1 (1065) forms fills out Part III for each partner as follows: Box 1 (Ordinary business income/loss) = -7 [or some other small negative number close to that]; Box 2 (Net rental real estate income (loss)) = [the amount I receive for rental income]; and Box 19 (Distributions--code A) = [amount I get paid after property taxes and out-of-state withholding are deducted]. The accountant who does this for us has said that as individual filers we technically need to file TWO K-1 (1065)s since box 1 and box 2 refer to separate activities (though she supplies us with only ONE K-1 (1065)). However, box 1 represents solely each partner's "share of the fee paid to the Sec. of State of [name of state] for the annual report of the entity." I am fine going through the preparation (in TTax) of two separate K-1 (1065)s, but every year the program asks me about passive loss carryovers that it calculates from previous similar box 1 fees the past few years. Then it goes into a long line of questions and worksheets about passive activity losses that I do not understand. On the screen "Report Carryovers - Regular Tax", the only thing shown is box 1's ordinary income of -12. Next up is the "any other carryovers" screen, which I leave blank. The -12 reappears next on the Report AMT carryovers screen, and after that I leave the "report other AMT carryovers" blank. On the next screen, the -12 appears again as "QBI suspended loss passive," followed by a screen to enter info about passive losses. I have no code Z in box 20. I don't believe we have any activities classified as SSTBs. Is there any way to stop this perpetual carryover (based solely on paying a sec of state fee) or am I stuck with until divesting this asset? Second question: Am I overreporting income by putting the Box 19 amount (distributions) on both forms? Should I be putting that amount only on the form that represents actual rental income?
