I have a new client who is a partnership.  Let's call this one XYZ LLC with 2 partners (who is a husband/wife duo).

XYZ received 5 K-1s from other partnership.  All K-1s had rental losses.  

1.  Questions - if my2 clients materially participated in these real estate ventures with XYZ LLC, I understand they can offset all of the losses from XYZ against their other ordinary income.  Is this correct?  They have to meet the 750 hours qualification, correct?

2.  If the 2 partners actively participated in ZYZ LLC, where do you mark on the XYZ partnership return to indicate that they actively participated?  Or will the personal returns of the husband/wife assign the $25000 passive loss limitation somehow?

They do have basis for all properties.

Thanks!!