k-1 loss

[ayavari]

I have a K-1 loss of $11,228. It does not show up online 7a f 1040 (from Schedule 1, line 9)as a deduction to lower my taxable income. Please help or explain what I am missing? Thank you, Steve

[Just-Lisa-Now-]

Is it unallowed?  Look for Form 8582.

[ayavari]

Hi,

Thank you for a quick response, however, this is K-1 loss from an S-corp not from schedule E, passive activity loss?

Can you explain a bit more?

Thank you,

Steve.

[Just-Lisa-Now-]

So you have a negative amount on Line 1 of the K-1?  Did you materially participate in the business?

[ayavari]

Yes, of course. Aren't I supposed to reflect my K-1 loss from my S-corp on my 1040 and take the deduction to lower my taxable income? Isn't it the reason why we establish S-corps? Thank you.

[Just-Lisa-Now-]

I have no clue what your role in the S-Corp is.

Did you mark the materially participated box next to Line 1 of the K-1 worksheet?

[ayavari · Accepted solution]

Thank you so much! That was the problem. I had not checked the box"materially participated", now, I did and everything is verything is fine now. It shows the loss of 1040 under other income. Much appreciated. Steve

[Just-Lisa-Now-]

It shouldn't show as a loss in "Other Income", it should be on Sch 1, Line 5.

And your previous comment "Aren't I supposed to reflect my K-1 loss from my S-corp on my 1040 and take the deduction to lower my taxable income? Isn't it the reason why we establish S-corps?"

Establishing an S-Corp for losses seems like alot of work for no reason...you could have had a loss on Sch C just the same.

[abctax55]

"...Isn't it the reason why we establish S-corps?"  No, it isn't.  It's for liability protection and possible savings on SE tax.   

How was this 'loss' generated?  

WAS a W-2 generated?

ARE you a professional tax preparer?

[mdtao31]

steve did you list it as "passive" or material participation?