Help with form 7203

[Togwotee]

I was hoping to get some help with form 7203 as I believe my taxes were submitted with an error. I will use hypothetical numbers for a return that I have already submitted.

I have a K-1 with let's say 2M in nonpassive losses.  My allowable loss from stock basis line 47c(form 7203) is 750k with a carryover of 1.25M to future years.  I don't think the basis limit is showing up anywhere on schedule E, schedule 1, or 1040 as TurboTax seems to be reporting the entire 2M in losses.  Do I need to adjust it manually in TurboTax, as form 7203 doesn't seem to effect the numbers elsewhere in the return?  If, so, how?

With my current filed return, if I had wages of 1M, it shows an AGI is 0 instead of 250k.

My losses do pass the at-risk and passive activity limit.  I also just found out about the excess business loss limit with form 461, which does not appear to be supported by TurboTax.  TurboTax unfortunately didn't ask a relevant question in the interview or alert me to a problem.  Since I am MFJ, my threshold limit 524K.  As far as I know the only fix for this would be to print out a Form 461 with an amended return and manually make an entry on line 8o on schedule 1, and then mail it in.   This would reduce my AGI to 476K and would then also give me an NOL of 226K to manually track (TurboTax doesn't seem to track this without form 461) in addition to the carryover of 1.25M from the basis limitation.  With this method where do I adjust for the form 7203 limit. 

Any insights or help would be greatly appreciated. 

[Mike9241 · Accepted solution]

well, Turbotax has a big problem. in my version (desktop deluxe) the 7203 computes the allowed and disallowed portions of the loss. but then ignores it when doing Form Schedule 1. ARE YOU READING THIS TURBOTAX PROGRAMMER? HOW MANY TAXPAYERS HAVE FILED INCORRECT RETURNS BECAUSE OF THIS?

if you complete the 7203 properly (numbers do not flow automatically to the 7203 YOU READING THIS TURBOTAX PROGRAMMERS) at least in my version so in your example your beginning stock basis would go on line 1 part 1 and the loss entered as a positive number goes in part III line 35. properly complete this will show the allowed and unallowed loss. but as stated this does not work 

to explain losses are limited to the lesser of your stock and loan basis or your at-risk amount.  often identical but there are many reasons why they may not be. 

anyway, for you, there is a workaround 

use form 6198 the at-risk form 

use your beginning basis which for most is the same as their beginning of the year stock basis and loan basis 

the rest is automatic. enter on line 6

[erinpatrickhourani]

This is still an issue in April 2023!  I cannot figure out how to carryover losses previously not allowed due to basis limitations.  I can complete Form 7203 in the desktop Home and Business version, but online TT Premium version doesn't support it.  However, the inputs on Form 7203 don't change anything in Schedule E and if I manually override Schedule E to input the "PYA" loss (as per IRS instructions for Schedule E), then I cannot e-file the form because it is read as an error.  I started a new thread with this issue.  Appreciate any help! 

[erinpatrickhourani]

This is still an issue in April 2023!  I cannot figure out how to carryover losses previously not allowed due to basis limitations.  I can complete Form 7203 in the desktop Home and Business version, but online TT Premium version doesn't support it.  However, the inputs on Form 7203 don't change anything in Schedule E and if I manually override Schedule E to input the "PYA" loss (as per IRS instructions for Schedule E), then I cannot e-file the form because it is read as an error.  I started a new thread with this issue.  Appreciate any help!