Schedule E: S-Corp Prior Year Unallowed Losses

[kjfkenfor]

Turbo Tax is putting my S-Corp prior year unallowed losses in column (j) of Line 28 (Schedule E).  The IRS instructions for Schedule E clearly state "Enter your total prior year unallowed losses that are now deductible on a separate line in column (i) of line 28."  How do I correct this?

[Anonymous_]

That would relate to Section 179 and you should have a figure on Line 11 of your K-1. 

If that is incorrect, please provide more details concerning the K-1 you received.

[kjfkenfor]

Sorry for taking so long to reply.  Stuff happens.

There is no Section 179 amounts on my K-1.

The items shown on my K-1 are:

Line 1:   33,221

Line 4:             5

Line 12:    'A'  270

Line 17     'A'       5

                  'V'     Ordinary Business  33,221

                            W-2 Wages              20,021

                            Qualified Property  15,562

I am expecting TurboTax to insert 33,226.00 on Schedule E, Line 28, column 'i' (for the PYA).

Instead, it inserted 33,221 on Schedule E, Line 28, column 'j' (for the PYA).

In addition, TT has generated Form 8995.  I do not understand why Form 8995 is generated.

S-Corp Shareholder Basis:

(I am the only employee, and only stockholder in the S-Corp)

	2019 Current Year (a)	Carryover from Previous Years  (b)	Sum of (a) + (b)	Percentage of (a) + (b)	Allowable Loss (c)	Allowable Loss from Debt Basis (d)	Carry Over Amounts (e)
Ordinary Business Loss	--	46,023.23	46,026.23	95.924	31,871.69	--	14,154.54
Section 179 Deductions	--	855.34	855.34	1.783	592.30	--	263.04
Charitable Contributions	270.00	830.43	1,100.43	2.293	762.01	--	338.42
Total Loss	270.00	47,712.00	47,982.00	100.000	33,226.00	--	14,756.00

[ThomasM125]

An unallowed loss would be a passive loss and as such would be reported on for 8582, (passive activity loss limitations) in the previous and current year. If allowed in the current year, it would flow to schedule E, page 1.

Line 1 on your 1120-S schedule K-1 would be ordinary income, and should appear on line 28(h) or 28(k) on page two of schedule E. Column (j) for schedule E, line 28 is for section 179 depreciation, I don't see any mention of that on the numbers you listed from your k-1 schedule.

Section 179 depreciation would appear on line 11 of your K-1 schedule.

Form 8995 is for qualified business income associated with the ordinary income amount listed in box 1 of your K-1 form, which is customary.