Client has a rental loss of $10,000 (passive with active participation). They also have $120,000 of W-2 income and K-1 income of $40,000 from a consulting business (active general partner). Form 8582 Part II is not including the $40,000 of nonpassive K-1 income in line 7, Modified AGI. As a result, the rental loss is being allowed despite the fact that W-2 income plus nonpassive K-1 income exceeds $150,000. What am I missing?