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How do I report a 1120S prior year basis limitation now allowed on 1040 Sch E p2?

david3
Level 7

Client had S Corp basis limitation in 2020 and the loss is allowed in 2021. When I click PYA on Sch E and enter the loss carryforward, the current year profit and the offsetting loss allowed appear in the Passive section of Sch E pg 2. The business is a non-passive business.

I followed the instructions from another answer that said to enter the loss carryforward in Section A column B. 

How do I get the income and the offsetting loss to appear in the passive section of Sch E p2?

 

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dkh
Level 14

Try entering another K1 with the carryforward loss information.  Check the box on the Sched Epg2 line 27

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2 Comments 2
dkh
Level 14

Try entering another K1 with the carryforward loss information.  Check the box on the Sched Epg2 line 27

david3
Level 7

That worked! Thank you.

I don't understand why the PS instructions don't say to enter it that way. When I followed the PS instructions, the type of activity changed from "Nonpassive" to "Former" after I entered the loss carryforward on the K-1 worksheet in Section A column b.

All the information is available for PS to track the loss carryforward and to report the PYA correctly on Sch E pg 2. I don't understand why we have to spend so much time figuring work arounds to properly report basis limitation.

Oh well, I'm done griping. I know it won't change anything but I feel better.

Thanks for your help.