For PA practitioners or those knowledgeable of PA taxes. 

I have a return with a K1 reporting a loss. The taxpayer has material participation. 

He is a PA resident but has a NRK1, as partnership is based in DE. I do not believe a PA return was filed if that matters. 

I cannot get the loss to flow through against his wage income. I have entered his % of profits, losses and capital. I marked material participation in the federal form, if this even matters. 

He is MFJ and total income is about $770k. Is this an income limitation? Is it just that he can't deduct this loss against other types of income? Or is there something I am missing? 

I fear it may be that he can't deduct it at all, but I want to make sure before delivering the return.