I have a client who has 3 K1s.

1 is from North Carolina and has a loss

2 from Alabama and both have losses

Client lives in Alabama

The federal return of course does not show any losses since they are not allowed.

the Alabama return shows the passive losses from the 2 Alabama K1s (Alabama allows passive losses to be deducted against all income - no passive loss rules here) but it does NOT show the passive loss from the North Carolina K1. 

I think that must be correct - and the NC K1 passive losses have never been deducted on Alabama in prior years (prepared by other CPAs) - but I want to understand why? Is it because North Carolina does not allow passive losses to be deducted - I believe NC follows Federal on this.