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glow141
Returning Member

Problem with final K-1 and Carryover Passive loss.

I had a final K-1 with entries in Line 1 Ordinary Income (large positive) and Line 2 Net Rental income (medium loss).  Furthermore this was a final K-1 (disposed of not by sale). TT Premier required Line 1 (and I assume other lines) be entered in one K-1 and the Line 2 Loss in a separate K-1.  The problem is TT did not treat the negative Line 2 as a final K-1 and allocated some of the carryover passive loss to it.  This is how I filed it.

I'm in the process of a 1040X. If I combined Line 1 and Line 2 and report the net positive on Line 1 only, it calculates the passive carryovers correctly only to other K-1s but also calculates a more beneficial QBI. Is this correct to combine K-1 Line 1 and Line 2 and report it on Line 1 for a final K-1 as a workaround?

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3 Replies

Problem with final K-1 and Carryover Passive loss.

It is okay if the income on both lines is passive.

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glow141
Returning Member

Problem with final K-1 and Carryover Passive loss.

As it is a final K-1, aren't both ordinary income (loss) rather than passive income?

Problem with final K-1 and Carryover Passive loss.

doesn't matter because passive losses are freed up to be used against all income.......they are not presented on Sch E that way and that could be a problem where ordinary income is in the nonpassive column and passive losses are in the passive column and you're combining the two.

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