How To Get K-1 Box 2 Loss To Move From Form 8582 to Schedule E Non-Passive Loss Column Check the REP status first: Go to Wages & Income -> Rental Properties and Royalties. Even though you aren't ...
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How To Get K-1 Box 2 Loss To Move From Form 8582 to Schedule E Non-Passive Loss Column Check the REP status first: Go to Wages & Income -> Rental Properties and Royalties. Even though you aren't entering a new property here, you must enter this section to answer the "Is the taxpayer a Real Estate Professional?" question. Ensure this is marked "Yes" for the spouse/the taxpayer. No matter who's name is listed on the Schedule E, it will check the "Yes" on the Federal Information Worksheet Part VI. (If you already have a property listed on a Schedule E, you can answer the question on that non K-1 related Schedule E.) Edit the K-1: Go back to the K-1 entry screen. The Critical Screen: Look for a screen titled "Describe the Partnership" or "Describe the Activity." * You must check the box that says "I materially participated in the operation of this business." * Note: Even though it's a rental, marking "Material Participation" while the REP status is active is the only way to move Box 2 income out of Form 8582. **It also doesn't matter if they were a Limited Partner or General Partner. **A Limited Partner, even though it's rare, can be deemed to materially participate if they meet specific, limited criteria: (1) they work over 500 hours, (2) they materially participated in the activity for any 5 of the past 10 years, or (3) for personal service activities, they participated in 3 prior years.