The IRS limits losses and deductions from passthrough K-1 activities using three calculations: the basis limitation, at-risk limitation, and passive limitation.

The program applies the limits as follows:

- Basis limits are applied first.
- If losses are allowed by the basis limits, at-risk limits (Form 6198) are applied.
- If losses are allowed by the basis and at-risk limits, the passive limits (Form 8582) are applied for passive activities.

Refer to the **instructions for Schedule E** for more information about K-1 loss limitations.

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