Partnership rental income reporting

[thomas-jaykangcp]

I am new to Proseries.  Last year with Prosystem FX, I had option to treat the rental income as a business and report the rental loss on Schedule K-1 line 1 as Ordinary Business Loss, rather than line 2 Rental loss. 

Is there a way to report the rental loss on Line 1 of K-1 with Proseries?

[TaxGuyBill]

Are "services" provided to the tenants?

If not, why do you think it should be an "ordinary" loss and be in Box 1?

[abctax55]

QBID considerations?

[thomas-jaykangcp]

If the services are provided to tenants, is there a way to report the loss in Box 1?

I want to know if the program will allow to report the loss in Box 1

thank you

[TaxGuyBill]

You can't randomly choose where to report it.  MOST rentals belong in Box 2, and you can't arbitrarily decide to put it in Box 1.  What is your reason why you think it belongs in Box 1?

If services are provided to the tenants (such as meals or maid service), it is more like a hotel.  That would mean income and expenses are entered on page 1 of the 1065.  And profits will be subject to Self Employment Tax.

[thomas-jaykangcp]

other programs let you do this.  with loss on Box 1, it will be fully deducted on 1040 schedule E, where as loss on Box 2 there will be limitations.  

[abctax55]

other programs let you do this

That doesn't make it correct.

Line one is NOT for rental real estate activities.  It is to be used for ordinary operating income.

Yep - line 2 results in the PAL limitations that ALL rental real estate activities are subject to BY LAW.

As Bill says - you don't get to pick & choose based on the preferred results.  

ARE services provided ?  I know it's been asked; I don't see that you've answered that very, very important question.

Are you a tax professional?

[thomas-jaykangcp]

yes I am a tax professional.  this particular client, he is real estate professional.  This is his primary business.  Program should give you an option to report on Line 1 on K-1.  But it seems this program does not have that option.  Thank you everyone for the input.  You've been very helpful.

[abctax55]

The determination of a Real Estate Profession is done at the individual level, not the entity level.

[TaxGuyBill]

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@thomas-jaykangcp wrote:

he is real estate professional.  This is his primary business.

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Neither one of those things would put it in Box 1.  It would still be in Box 2. 

[Murtaza_Ismail_CPA]

Rental Loss will still be reported in Box 2. On form 1040 Schedule E, Rental Loss will be reported as Non-Passive Loss (For Real Estate Professionals).