I am using ProSeries Basic Edition which doesn't have Form 6198. I have to limit a loss due to basis on a S-corp nonpassive K-1. Does anyone have a work-around?

[TaxGuyBill · Accepted solution]

Some people disagree with me, but Form 6198 is not used to limit a loss due to Basis.  It should give the same result and is a 'cheat' work-around, but the way I understand things Form 6198 should not be used.  You would only enter the amount of loss that is allowed (such as Box 1), then manually enter the unallowed amount in future years once Basis is restored.

If you want to file Form 6198, you can either (a) manually fill it out, manually limit the Basis, and attach the form to the tax return, or (2) use ProSeries Professional on a Pay-Per-Return basis.

[rbynaker]

I don't disagree with Bill.  Before somebody told me I could use the 6198 as a crutch to limit losses to basis, I always made two K-1 entries.  One to match the actual K-1, and another called XYZ Corp - Loss in Excess of Basis.  Then I'd plug in an amount of income for that K-1 equal to the excess loss.  Then some knucklehead invented bonus depreciation and I had to start having complicated spreadsheets to keep track of both federal and state losses in excess of basis since many states don't allow bonus depreciation.  And invariably there's some offsetting manual adjustment you need to make at the state level to make things work if you do have bonus depreciation.