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PTP K-1 with subordinate PTPs

jpmh
Level 3

I have a PTP Schedule K1 for a limited partner with no material participation. The K-1 shows the PTP has a "subordinate PTP" within it. The main K-1 view is reported under A's EIN but the K-1 package identifies a separate EIN for B and it then breaks out the individual contributions from each A and B into each of the boxes of the "main" K1.

As I understand it, passive losses from each PTP can only be used against passive income from the same PTP. ProSeries (I'm using Professional) only sees the rolled-up number in the main K1.

I'm unclear how to handle the following situation...

If in year 1, the main K-1 shows a box 1 loss of $1300, and that comes from $1000 loss from A and $300 loss from B. ProSeries properly reports no loss on schedule E and tracks a $1300 passive carryover loss. 

Now suppose in Year 2, the main K1 reports $400 of income in Box 1. ProSeries will report 0 taxable and update the passive loss carryover to -$900.  But if the breakdown between the PTPs shows: A has a loss of 200, B has positive income of 600, isn't there really $300 of income to report (B's income of $600 less its carryover loss of $300). And A now has a $1200 loss carried into the next year, and C has no carryover loss.

If the "silo" analysis is not needed, then ProSeries is handling it correctly, but I think the silo approach is required.

So - am I right that the silo approach is needed and $300 income should be reported.  And if so, how to get ProSeries to handle this and properly adjust carryovers as well?  

 

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