The K-1 we received has a loss of $42,397 in Box 1. In Box 2 (Net Rental Real Estate Income) the amount is $4,130. TurboTax requires me to make two separate K-1 entries for this same K-1 form. When filling out the Form 6198, in order to take a larger portion of the $42k loss of Box 1, can I add the $4,130 to Line 2C , with the Description of From Rental K-1? There is also Interest Income of $3,942 in Box 4 that appears on the 6198 line 3. There was also a non-deductible expense of $593 that is appearing on line 4. The Adjusted Basis of the K-1 partner is $21,051.
My Smart Worksheet Shows
A Line 1 Disallowed Loss $23,644 Allowed Loss -18,753
F Line 4 Disallowed Loss -$331 Allowed Loss --262
H Income 3,942
I Deductible Loss line 21 -15,073
Am I handling the Rental K-1 income correctly on the 6198?
I believe the rental income should be on line 3 of 6198.
But back up a bit ... are you sure that Form 6198 applies to you? The losses are first limited to your Basis (in your case, $21,051), but if you have At-Risk limits (for amounts Not-At-Risk), that will reduce the allowable losses even further.
At-risk basis is calculated at the end of every tax year. Partners’ at-risk basis increases when they add additional investments to the business or receive income from the business in excess of deductions. At-risk basis decreases if the amount in deductions exceeds the amount of income received.
Yes, but as I said before, it seems like you are talking about 'regular' Basis (you mentioned the equity), not At-Risk Basis.
You may consider going to a tax professional.
- I do not want to go to a "tax professional" before I have a better understanding of this "at-risk" subject. I will attempt to get a better understanding of the subject. If there is anyone else out there that can aid my understanding of the subject, I would appreciate it.
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