Proseries is not automatically calculating my rental loss in Schedule E

[ddh2020]

One of my clients has a rental loss of the year, and proseries is not calculating it automatically like usual.  

On schedule E Worksheet, I usually enter the property's info and click the boxes for "active participation" and "Material Participation", then i proceed to enter expenses.

Line 21 on Schedule E is resulting in a loss.  However,  line 22 "Deductible rental loss" is 0.  If i scroll down it says "Passive dissalowed loss" all the way to the bottom.  Nowhere in the return am i stating that this is a passive activity as the owner actively participates in the rental business.

The only way i got proseries to calculate this loss is by checking box "G" for "Other passive exceptions", I dont even know what that means.

Has anyone encountered the same issue?

Thank you

[Just-Lisa-Now-]

Do they have too much income to allow the loss?

[Marc-TaxMan]

look at 8582

[ddh2020]

Their total combined income is $197k, does that exceed the allowed income limitation?

[Marc-TaxMan]

look at 8582, please.  on which line does this activity show?

[Just-Lisa-Now-]

https://www.usatoday.com/story/money/personalfinance/2014/04/01/tax-qa-rental-property-losses/715481...

[TaxGuyBill · Accepted solution]

Real Estate Rentals are automatically passive unless there is a special provision to treat them as non-passive (such as self-rentals, rental of land, and Real Estate Professionals).  Active and/or Material Participation do not change that.

So by default, the passive losses are not allowed and are carried forward on Form 8582.

If the taxpayer "actively" participates there is a special provision to deduct up to $25,000 of passive losses *IF* the taxpayer's income is under $150,000.  Because your taxpayer's income is over $150,000, your taxpayer does not qualify for that provision.