Completing Form 6198 in ProSeries

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.