I invested into a real estate partnership and got k-1 form at the federal level and also for a few states like Georgia and Colorado. The rental incomes on these K-1 forms (at the federal level and also for these states) are all negative, but it also shows some interest income. At the federal level this rental loss is a passive activity loss and in my case it hits PAL limitation and I don't have a passive income to use this loss, so my schedule E shows a passive income of $0. My question is that for these states like Georgia, should I report a negative rental income as reported on the Georgia K-1 form, or should I report a $0 rental income (to be aligned with the federal PAL limitation) ? If I report a negative rental income on the Georgia state form, it seems it will offset the interest income. I am not sure if this is right because these interest income shouldn't be treated as passive income which can be offset by a passive loss? (at least on the federal form I couldn't use a passive loss to offset any interest income).
