Sub s program calculates allowable loss (basis worksheets) when current year operating loss exceeds basis. However, k-1 for each shareholder still shows total loss for the year. What to do?

[richard64]

At risk worksheets don't allow fields to be populated  Form 6198 calculates correct allowable loss but k-1 -line 1 ordinary loss still has total loss (same as 

[dkh]

The K1 will show the total loss. Each shareholder needs the basis worksheet to limit the loss on their personal tax return  thru Form 6198  which will flow to Sched E page 2

[richard64]

Thanks again for your help.  6198 calculated the correct allowable loss but Schedule E page 2 still shows the full loss as reported on K-1 part III on line 1. Very frustrating to see how pro series left us hanging. Their customer help associates are stymied as to figuring this out. Meanwhile it's up to pros like you to figure it out. Any additional help will be appreciated.

[dkh]

have you check the box in Part II of K1 ---Some Investment Not at Risk?    

[richard64 · Accepted solution]

Bingo!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! - I had all investment at risk checked.

It worked

You're the best

[dkh]

Hooray!!!!     Glad I could help.

[TaxGuyBill]

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@dkh wrote:

 Each shareholder needs the basis worksheet to limit the loss on their personal tax return  thru Form 6198  which will flow to Sched E page 2

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I realize many ProSeries users use Form 6198 as a work around, but Form 6198 is NOT supposed to be used for Basis limitations.  That is for At-Risk limitations.

The proper way to do it is to manually calculate the allowable loss, and only enter that on the K-1.  Then manually carry forward any unused losses for when Basis is restored.

[dkh]

I stand corrected.   Thank you @TaxGuyBill   

[richard64]

ok - thanks. So the K-1, line 1 for the 1040 will be different than the K-1, line 1 on the Sub S return?

[richard64]

ok - thanks. So the K-1, line 1 for the 1040 will be different than the K-1, line 1 on the Sub S return?

[dkh]

per @TaxGuyBill  - yes.      I used the Form6198 for several years for a client that had unallowed losses.  The program tracked my unallowed losses, only allowed loss was reported on return.......

[richard64]

ok - thanks. So the K-1, line 1 for the 1040 will be different than the K-1, line 1 on the Sub S return?