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Limiting the amount of a taxpayer's share of the K-1 loss in an S-Corp. to his basis in the S-Corp.

Glenn Z
Level 1

 

In a case where the taxpayer’s share of the ordinary loss reported on a K-1 from an investment in an S-Corp. exceeds his basis, the section titled “Disallowed Smart Worksheet” at the bottom of form 6198 does not populate automatically, even if the beginning of the year basis is reported in both the Simplified Computation and the Detailed Computation sections of form 6198.  It appears that you must “override” the fields in the “Disallowed Smart Worksheet” to limit the loss.  Is there a way to get the fields to populate automatically, so you do not have to “override” any fields in the tax return?

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2 Replies 2
IRonMaN
Level 15

Normally, no overrides are required.  Out of curiosity, has the loss been limited on the actual 1040?

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
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TaxGuyBill
Level 15

@Glenn Z wrote:

exceeds his basis, ... form 6198 does not populate automatically


 

Although I realize that some people use Form 6198 as a work-around, that form is NOT used for limiting Basis.  That is for At-Risk Limitations, NOT Basis Limitations.  So that may be why it is not populating automatically.

In ProSeries, you need to limit Basis manually.  Only enter the amount of the loss allowed (if any) and MANUALLY carry over any excess losses.