Reporting K-1 1231 Loss on personal 1140S did not reduce income/lower tax

[Not8Wizz]

My husband has a S-Corp that owns his restaurant of 5 years with another shareholder.  He owns 55%.  The restaurant was sold in April 2024 at a loss.   The S-Corp filed taxes and we were provided a Schedule K-1 to file our personal tax return.   The K-1 Box 1 has a business loss of -9,965 and Box 9 has a 1231 Loss of -51,186.   

When I entered those numbers into TT 1140S under K-1, I was prompted to put in the S-Corp purchased date and sold date.  There is also an additional form stating for the Sale of S Corp referring Box 17, Code K.  However, my K-1 did not have a code "K" in box 17.   Should I select the option "Disposition other than sale" ? I am surprise to see that the 1231 Loss did not lower our adjusted gross income.  

[PatriciaV]

Schedule K-1 Line 17 Box K reports dispositions of property with Section 179 deductions. If your K-1 has nothing for that code, you can leave these boxes blank.

Since the S-Corp was sold to a third party, you should report this as a "complete disposition" and that you sold your interest in the company.

You can review how the Section 1231 loss offset your Capital Gains/Losses on Schedule D Part II and Form 4797 Part I. Note that capital losses are limited to $3,000. Unused capital losses are included with your tax return until the loss is used up, either by reducing your taxable income or netted against capital gains.