Non-Passive Real Estate Losses

[cantontaxgroup]

Clients have well over $150,000 income. They have a partnership in a rental property whose losses qualify for non-passive treatment. (Active management... average rental period under 7 days).

If I show the Rental loss of the Partnership Form 8825, it allocates the loss on each of their Schedule K1's to Line 2, Net Rental Loss.

How do I enter the K1 information on their Individual tax returns and tell Proseries to treat it as Active Rental loss? I can't find a way to do it and am considering adjusting the Partnership Return to show the entire loss as Active Business Income/(Loss).

Thanks for your input.

[Terry53029]

If your clients have a short term rental that meet the IRS requirments including providing substanial services (daily cleaning,remove trash ETC) then you put it on 1040 schedule C, and not on E. If  substanial services not provided, then it goes on schedule E, and unless your client meets requirements to be a real estate professional then it is passive income

[TaxGuyBill]

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@cantontaxgroup wrote:

non-passive treatment. (Active management... average rental period under 7 days).

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Do you mean they "Materially Participate"?  That is required for it to be non-passive (in addition to being a short-term rental).

Enter it in Box 1 of the K-1 worksheet.