ProConnect HelpIntuit HelpIntuit

Completing Form 6198 in ProSeries

by Intuit Updated 1 month ago

This article will help you understand at-risk limitations for K-1 losses and how ProSeries calculates allowable loss amounts.

What are at-risk limitations?

The at-risk limitation is the second of three limitations applied to income-producing activities. The losses must apply in the order listed:

  • Basis limit
  • At-risk limit
  • Passive limit

The at-risk limit is similar to the basis limit in that one of the major components of the amount at-risk is the amount invested in the activity. Under the basis limitation, losses are limited to the amount invested in the activity. However, under the at-risk limitation, losses are limited to the amount an investor actually put at-risk. This can differ from the amount invested due to loan guarantees, stop-loss agreements, or nonrecourse loans.

How are at-risk limitations calculated?

The at-risk limits are computed on Form 6198. If partner or shareholder distributions cause the amount at-risk to become negative, gain is recognized to the extent losses have been allowed by at-risk in prior years and have not already been recaptured.

How do I enter at-risk information in ProSeries?

You can calculate loss limitation due to at-risk limitations by entering Information regarding at-risk limits on Form 6198.

Follow these steps to calculate loss limitation due to at-risk limitations:

  1. Open the K-1 Worksheet for the partnership or S corporation:
    1. Press F6 on your keyboard to bring up Open Forms.
    2. For a partnership, type "P" on your keyboard and the K-1P Worksheet will be highlighted. Click OK to open the form.
    3. For an S corporation return, type "S" on your keyboard and the K-1SCorp Worksheet will be highlighted. Click OK to open the form. 
  2. Scroll down to Part II of the K-1 Worksheet.
    • This is information about the partner or shareholder, depending on which K-1 worksheet you need.
  3. Mark the checkbox labeled Some Investment in Partnership/Corporation not at-risk.
  4. Click on the QuickZoom to Form 6198 for at-risk limitation.
  5. Enter all applicable information concerning your at-risk limitations on Form 6198.
ProSeries BasicProSeries Professional

Sign in now for personalized help

Ask questions, get answers, and join our large community of Intuit Accountants users.

More like this

Dynamic AdsDynamic Ads