Schedule E Loss doen't flow

[PeteY48]

On Schedule E Line 21 a loss is shown. It doesn't require form 6198.

Line 25 does not reflect the loss.

How do I correct that without an override?

The Schedule E is flowing to a 1041 (simple trust)

[Just-Lisa-Now-]

Does it show up on the 8582?

[PeteY48]

Yes it does show up in the 8582. In Part V Column b it shows as a positive number. However when the number is transferred to Part I line 2b it shows as a negative number. The statement at line 3 says only positive numbers can be a loss. I'm confused.

[TaxGuyBill]

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@PeteY48 wrote:

Yes it does show up in the 8582. In Part V Column b it shows as a positive number.

However when the number is transferred to Part I line 2b it shows as a negative number.

The statement at line 3 says only positive numbers can be a loss. I'm confused.

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It looks like you have a Passive Loss.  Passive losses can only be used against Passive Income, unless an exception applies.  So it seems correct, unless you think one of the exceptions apply.  Do you think an exception applies, and if so, what exception?

Line 2b?  So there is NOT "Active Participation"?

I'm not sure what statement or line 3 you are referring to.

EDIT:  Oh, I see now you said Simple Trust on a 1041.    Hmmm, I would need to think if that changes anything.

[PeteY48]

What I am trying to do is to is create a Net operating loss carryover for the trust. The trust has 2 forms of assets, the rental house and some securities. That's it. Large legal fees are associated with the rental house, so if everything  associated with it  are passive, then huge costs are falling through the tax loopholes/laws..

[Just-Lisa-Now-]

Active participation is only for estates 

Material participation is only if youre a real estate professional.

Those are the messages it gives for as Simple trust with Sch E when you mark those boxes. 

@PeteY48  so your passive losses will only offset passive income, looks like your losses are suspended until theres either passive income to use it against or the property is sold, then they can be used.

[TaxGuyBill]

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@PeteY48 wrote:

so if everything  associated with it  are passive, then huge costs are falling through the tax loopholes/laws..

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As Lisa pointed out, they are not 'falling through', they are just suspended.