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@Terry53029 wrote:

 the only way to change the income/loss reported on line 2 of the K1 as non-passive is to override the schedule E page 2.

I have a couple of clients that have short term rentals, and I fill out schedule C for them (they do have to pay se tax) which is why I suggested the issuer could put the loss on line 1

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I agree, you should be able to ENTER it in Box 1 to make ProSeries do it correctly.  But because it is still a rental for other purposes, in my opinion the preparer correctly put it in Box 2 (although as I said before, the Instructions make that questionable).

Are "services" provided to the tenants?  If not, it should be on Schedule E, not Schedule C.