I would like to ask for guidance on limiting a partnership loss reported on a Schedule K-1.

Background:
My client is a C-Corporation that holds an ownership interest in a partnership.

Details:
In 2024, the partnership incurred a net loss, and as a result, my client received a Schedule K-1 reflecting their share of the loss.

I have already entered everything from the K-1 into the corporate return. However, based on the partnership basis rules, my client is only allowed to deduct a portion of the reported loss.

Currently, the Form 1120 reflects the entire loss, but I need to properly limit it based on the client's basis.

For example:
Partnership Net Loss: 500,000
Client's Ownership: 50%
Schedule K-1 Loss: 250,000
Client's Basis: 100,000
Allowed Loss: 100,000
Disallowed Loss: 150,000
Loss currently showing on Form 1120: 250,000

What is the correct way to reflect the limitation on the return?

1. Should I adjust the K-1 loss manually to reflect only the allowed $100,000?

2. Should I add an income adjustment to offset the excess loss, resulting in a net deduction equal to the allowed loss?

3. Or if you have other solutions.

Thank you in advance for your guidance!