Where to record PY disallowed loss due to basis limitation?

[MarinaEA]

S Corp shareholder. The shareholders 2020 loss was disallowed due to basis limitation. The basis is restored in 2021. Where do I enter PY suspended loss carryover on 1040? 

A schedule K-1 section A column B has "suspended loss carryover from prior year". Would that be the right place to enter it? If I enter it there, it seems to flow to the Schedule E, however it changes the passive status to "former". The shareholder is 100% actively involved in the business. 

[TaxGuyBill]

---

@MarinaEA wrote:

A schedule K-1 section A column B

---

If you look at the title, that is for Passive Loss adjustments.

Enter ANOTHER K-1, but for the business name call it "PYE".  On that second K-1, enter the allowed amount from the carryover.

[MarinaEA]

Yes, I did a bit of research and read the instructions for the schedule E and found this:

Losses Not Allowed in Prior Years Due to the Basis or At-Risk Rules

• Enter your total prior year unallowed losses that are now deductible on a separate line in column (i) of line 28. Do not combine these losses with, or net them against, any current year amounts from the partnership or S corporation.

• Enter “PYA” in column (a) of the same line.

To accomplish this in Proseries, seems, that is exactly what we need to do - create a second K-1.

I just don't want any notices from the IRS if they can't match it in their system or potential audits, but seems, that's what the instructions say to do.

Another client has loss limitation due to the basis. I tried to use the form 6198 to limit his loss, but then I read in this forum others mentioned that this would be incorrect, right? Seems, we have to manually enter ONLY allowed loss on the K-1? I did that. Interesting when I use the form 6198 to limit the loss, QBI recalculates, and he gets a larger refund, so I am questioning if this is accurate. But when I enter the actual allowed loss on the K-1, he gets no QBI.