If your Partnership Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. has an amount in Box 13 (Code W) with the Form 1040 filers should enter the Box 13, Code W loss on Schedule E, Part II as a non-passive loss instructions, the following steps will enable you to enter that into the TaxAct program.
This will result in the amount transferring back to Line 28, Column (h) of the Schedule E (Form 1040) Supplemental Income and Loss, Page 2. By creating a second Schedule K-1 it is possible, when necessary, to mark "Material Participant" on one Schedule K-1 and "Not A Material Participant" on the other Schedule K-1. This indication is what determines whether a loss is passive or non-passive and both cannot be indicated on the same Schedule K-1.
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