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Basis Limitation

Harvest
Level 3

How should I be entering/documenting basis limitation on individual return for S-corp K-1. Client basis went negative this year, but I only see worksheets for passive activity and at risk loss limitation and no basis computation worksheet. Is there a basis computation worksheet (with calculated limitations)? If not what is everyone doing to work around this?

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Accountant-Man
Level 11

PS does not have a basis limitation worksheet.

I use the 6198, at risk.

** I'm still a champion... of the world! Even without The Lounge.

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Accountant-Man
Level 11

PS does not have a basis limitation worksheet.

I use the 6198, at risk.

** I'm still a champion... of the world! Even without The Lounge.

View solution in original post

Harvest
Level 3

I wish they would add a separate sheet for that calculation it would be more appropriate, but at risk worksheet will work. I wonder if Lacerte has that worksheet, but obviously this is not the place to ask that question.

sheri414
Level 3

How are you making Form 6198 work?  I have the info filled in and in Part IV of 6198, ,it shows $-27,442 as deductible loss and $16,401 as amount at-risk at end of year.  Yet the full loss of $39,944 is flowing to schedule 1.  I cannot figure out how to make it only allow the loss up to their basis.  What am I doing wrong?

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TaxGuyBill
Level 15

@sheri414 wrote:

 What am I doing wrong?


 

Well, the first thing you are doing wrong is using Form 6198 (for "At-Risk" limitations) to limit Basis.  😁

sheri414
Level 3

Do you have a better method?  I've researched this and from what I've found, ProSeries doesn't have a basis limitation worksheet and other users are using 6198 to calculate.  How do you handle losses in excess of basis?

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TaxGuyBill
Level 15

@sheri414 wrote:

Do you have a better method?  I've researched this and from what I've found, ProSeries doesn't have a basis limitation worksheet and other users are using 6198 to calculate.  How do you handle losses in excess of basis?


 

When filling out the K-1 worksheet, only enter the allowable amounts (up to the Basis).  That is what the program would do if it had a Basis limitation worksheet.

Manually carry forward excess amounts and manually enter on future tax return when Basis is restored.

sheri414
Level 3

Thanks

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sband3
Level 1

Ex:  $6,000 carryforward loss from previous year - $5,000 Income from Line 21 on Form 1120S which is normally entered on Line 1 of Sch K-1. With the 80% limit on income, I can use $4,000 of that carryforward loss against the $5,000 income leaving $1,000 taxable income (which is then added to personal Form 1040 as shareholder income). The remaining $2,000 carryforward loss can be used for future returns.

My question....If we use only the "allowable loss" amount or "income minus allowable loss" ($1,000) on Line 1 of Schedule K-1, then it will not match Line 21 (Ordinary Business Income/Loss) on Form 1120S ($5,000). Am I missing something? 

Not sure where to report the carryforward loss on Form 1120S or Schedule K-1. Or do we?

 

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sjrcpa
Level 15

FYI. Lacerte does have basis computation worksheets; will limit the allowed loss to basis; and will carry over the losses in excess of basis.


ex-AllStar
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sheri414
Level 3

I'm a 20 year ProSeries user so not wanting to switch software this far in.  But thanks for the suggestion.

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