A rental property with either a current- or prior-year unallowed passive loss is being sold in the current tax year to a related party. The loss shouldn't be allowed when the rental property is sold to a related party.
To prevent the loss on the sale of a rental property from being allowed in the year of sale:
From the Forms menu, choose Select Form to access the Open Forms window.
Type the letters EW and click OK to open the Schedule E Worksheet.
Scroll down to the section of checkboxes under Check All That Apply.
ProSeries doesn't support limitation on business property sold to related party. Not checking the complete taxable disposition will simply disallow the losss for the current year and create Form 8582. If there is other income in the return, it'll still allow the loss. The only solution in this case is to override the Asset Entry Worksheet to zero out the loss for Form 4797.
ProSeries doesn't support a Home Office Worksheet for Schedule E, page 1. If the home office is for a Schedule E, page 2 activity, such as for a partner in a Partnership, the worksheet from IRS Pub. 587 should be used.
Tax Help states the following about the letters "NPA" printing to the left of line 26 on page 1 of the Schedule E:
"The Schedule E Worksheet could also be marked as "Other Passive Exceptions" which the program treats as a non-passive activity.
Pub 925, page 4 "Activities That Are Not Passive Activities"-
The following are not passive activities:
(3) The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental."