How do I report a 1120S prior year basis limitation now allowed on 1040 Sch E p2?

Forum|Forum|4 years ago
July 13, 2022
1 reply
17 views

Client had S Corp basis limitation in 2020 and the loss is allowed in 2021. When I click PYA on Sch E and enter the loss carryforward, the current year profit and the offsetting loss allowed appear in the Passive section of Sch E pg 2. The business is a non-passive business.

I followed the instructions from another answer that said to enter the loss carryforward in Section A column B.

How do I get the income and the offsetting loss to appear in the passive section of Sch E p2?

ProSeries Professional

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Best answer by dkh

Try entering another K1 with the carryforward loss information. Check the box on the Sched Epg2 line 27

dkhAnswer

Level 15

Try entering another K1 with the carryforward loss information. Check the box on the Sched Epg2 line 27

D

david3Author

Level 7

That worked! Thank you.

I don't understand why the PS instructions don't say to enter it that way. When I followed the PS instructions, the type of activity changed from "Nonpassive" to "Former" after I entered the loss carryforward on the K-1 worksheet in Section A column b.

All the information is available for PS to track the loss carryforward and to report the PYA correctly on Sch E pg 2. I don't understand why we have to spend so much time figuring work arounds to properly report basis limitation.

Oh well, I'm done griping. I know it won't change anything but I feel better.

Thanks for your help.

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