Submitted by enCPA on 02-09-2021 12:39 PM
It's tricky to deal with situations where an individual investor receives a K-1 that includes both box 1 (ordinary income) and box 2 (rental income) inputs, and the investor materially participates, but isn't a real estate professional. Currently, in order to get the program to count the box 1 as nonpassive while still counting the box 2 as passive, the box 2 needs to be entered in its own separate input. Which would be fine... except that then Lacerte's tool for automatically calculating basis and amount at risk no longer works, and it's too bad to lose that.
I would instead love to see this part of the program have three checkboxes labelled something like "materially participated," "actively participated in real estate", and "real estate professional". Then, if the material participation box is checked, but real estate professional isn't, Lacerte puts the box 1 and box 2 amounts in the right spots on the tax return, while also calculating basis and amount at risk, if necessary.
Thank you for your consideration!
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