South Carolina K-1

[CryptoEther10]

I am a limited partner in a multifamily syndication in South Carolina. I received the state K-1. Under line 2, "net rental real estate income (loss)," the following is reported:

• Federal K-1 amount -15,078
• Plus or minus South Carolina adjustments 13,477
• Amounts allocated to South Carolina  -1,601

Where (how) do I input this for the non-resident South Carolina return? 

[RobertB4444]

You'll create a non-resident tax return for South Carolina.  It will ask you to go through the income that you've earned and figure out what items of income are taxable to South Carolina.  I am assuming, since you asked, that this is the only South Carolina income that you have.  So you will set this income aside and this will show up as $1,601 in income for South Carolina, which is below the deduction amount and won't be taxed.

OR

The dashes in your post are representing negative numbers so the total South Carolina income there is a negative $1,601 in which case you do not need to file a South Carolina tax return at all.

[CryptoEther10]

The income is negative ($1,601). Do I input the loss under "rents, royalties, and K-1 income?" My intent is to carry forward this loss to offset future gains (or do you think this unnecessary for South Carolina)? Thank you!

[AnnetteB6]

On your Federal return, you will enter the information in the K-1 section.  Then the loss reported in box 2 will be automatically reported on Schedule E.  

There will not be a place in the K-1 section to enter the SC-specific items.  If an SC return were required, you would enter those items on the SC return.  If you had other income to report for SC, then the loss would reduce that other income.  There is no need to report just a loss on an SC return.  

@CryptoEther10

[CryptoEther10]

Thanks. Yes, I entered the information in the Federal return. However, I am confused about what to do for the South Carolina return. I do not have any other sources of income for South Carolina other than the multifamily partnership.  (fyi I reside in California)

1. For the South Carolina return, should I input the loss (1,601)? My two thoughts: I can carryforward the loss to offset future capital gains. Also, I will have to pay for depreciation recapture in the future whether or not I decide to take the depreciation today.
2. If carryforward is recommended, do I input this loss in "rental, royalties, and K-1 income?"

[PatriciaV]

There is no reason to include the loss on your non-resident return. The carryover is recorded on your Federal return and will be available in the future to offset income in South Carolina. If you still wish to enter this loss, be sure you enter a negative number for K-1 income.