What is the reason you would report K-1 nonpassive loss from 2022 and the then the same amount in 2023 in Part II of schedule E?

[Yourcfo67]

I have a great deal of experience as a financial accountant but only started doing tax last year.

The previous CPA reported 2022 K-1 amounts from 2022 on both the 2022 and 2023 1040 part II scheduled E.  The clients actual loss from 2023 is much greater than the amount reported on the schedule E.  In reviewing I notice that in fact the same K-1 from 2022 was used to prepare the 2023 1040.  Is this just a mistake?  I am afraid I am missing something here.  If this is just a mistake it seems like something that would have been caught on review.

[TaxGuyBill]

Was the 2022 tax return not able to claim the loss due to the lack of Basis?  That would be the most common reason why a 2022 loss would show up on a 2023 tax return (if Basis was restored).

However, you said 2023 had a loss, so unless contributions were made (or some other way to increase Basis), then the losses would not have been able to be used.  That leads me to suspect it was a mistake.

At any rate, looking at Basis for both years (and if the 2022 tax return allowed the loss) is the first thing I would look at.

[BobKamman]

It would help to know what kind of K-1 (trust, S corp, partnership?) and whether you checked to make sure it's not using a fiscal year.  

[Yourcfo67]

Sorry, yes, it would help to have that info.  Had plenty of basis several $100,000 more than the loss he could have taken in 2023.  It is an LLC taxed as an S corp with two members.  Both the tax payer and the LLC have calander tax years.   I also should have said the amount used on both the 2022 and 2023 Sch E part II. Are numbers from the 2022 K-1.  I have the 2023 K-1 and it was like it never existed in terms of the numbers making it to the 1040. I had concluded it was a mistake but since I have been working on more diverse tax situations i feel like I am drinking from a fire hose.  I have learned a lot but realize I have a lot to learn.  I was a pretty confident CFO but tax has humbled me.  Thanks for your help!  Can anybody think of any reason you would just reuse a K-1 for a subsequent year.

[BobKamman]

I can usually count on about 1% of clients to bring me a 1099 or other document from the previous year.  Sometimes, from three years ago.  That's why we try to have two pairs of eyes check the dates on everything, as well as the amounts.  If you're not spotting anything, you're probably missing something.